Equities ended narrowly mixed Tuesday as they held onto much of Monday's gains but were dampened by hawkish sounding Federal Reserve comments and other policy uncertainty. The Dow Jones industrial average firmed 0.3 percent, the S&P 500 was flat, and the Nasdaq slipped 0.4 percent. US bond yields and oil prices rose while the dollar was mostly weaker.

A well-received US Treasury 3-year note auction supported the bond market but comments from Federal Reserve Chair Jerome Powell and other Fed officials who suggested rate cuts are not coming any time soon kept market interest rates biased higher. The Fed comments, though largely as expected, spurred further downgrading of expectations for rate cuts this year. Fed funds futures now see a 50-50 chance of a rate cut in June, down a bit from Monday, with odds heavily favoring a rate cut in September. A few weeks ago, markets were confident the Fed would cut in June and at least once more this year.

Markets remain on edge amid uncertainty about tariffs and the likelihood of a trade war after the president's latest announcement of 25 percent tariffs on steel and aluminum imports and his pledge to announce"reciprocal" tariffs later this week. Investors are also hoping for clarity on the impact of a government spending freeze and the administration's immigration policies, with the threat of a government shutdown looming next month. Finally, markets are cautious ahead of consumer price index figures due Wednesday. Headline and core CPI are both expected up 0.3 percent on the month, suggesting the disinflation process remains stalled.

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.