Equities were torched across the board Wednesday by news the Federal Reserve sees only two rate cuts in 2025 instead of the four it projected in September. The Dow fell 2.6 percent, the S&P 500 lost 3.0 percent and the Nasdaq dropped 3.6 percent. US Treasury yields and the dollar jumped and oil prices slipped.

News that disappointing inflation readings and higher inflation and growth forecasts were spurring the Fed to scale back its rate cut plans shocked investors who now contend with the prospect that there will be a lengthy pause in the Fed's plans for rate cuts and that rates may not go down after all.

The major averages sold off heavily and ended at the day's lows, with the likely prospect of cascading selloff as other global markets open. Bond yields saw big moves higher with the 2-year note up about 15 basis points and the 10-year yield up about 11 basis points from where they traded before the Fed news. Worst hit were consumer discretionary, consumer staples, utilities, and communications services.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.