Stocks slipped early Tuesday but recovered from the day's lows amid bargain hunting but the market remained under selling pressure for a second straight day in response to fallout from the Trump tariffs. The Dow Jones industrial average fell 1.6 percent, the S&P 500 lost 1.2 percent, and the Nasdaq slipped 0.4 percent. US bond yields rose while oil prices and the dollar fell.

Investors were downgrading growth expectations and upgrading expectations for Federal Reserve rate cuts to support the economy on th US tariffs and unfolding retaliation from Canada, China, and Mexico. Trump's aggressive trade moves caught markets by surprise as many expected the president to pull back from his tariff threats rather than spark the global trade war that seems to be unfolding.

Megacaps in particular saw dip-buying after a selloff on Monday and a selloff early Tuesday to help the Nasdaq rebound but the rally ran out of steam. Among sectors, big losers included consumer discretionary, energy, consumer staples, utilities, and financials. Consumer-focused stocks had a bad day amid concern over consumer spending, with Target in particular off sharply after warning of a spending slowdown in February and an uptick in produce prices soon in response to the tariffs. Shares in automakers dropped amid concern over disrupted supply chains and surging input prices. Financials were among the worst performers on slowdown fears with Wells Fargo, JP Morgan, Citigroup dropping sharply.

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.