Stocks rebounded Friday with gains nearly across the board dip-buying after Thursday's steep decline and megacaps leading the recovery. Many traders saw the market as oversold on a short-term basis but remained bearish on the outlook, largely due to expected fallout from the ongoing trade war.

The Dow Jones industrial average gained 1.7 percent, the S&P 500 rose 2.1 percent, and the Nasdaq was up 2.6 percent. The major averages were ending the week much lower with the S&P 500 down 2.3 percent on the week. US bond yields and oil prices rose while the dollar was mixed against major currencies.

Rising expectations that a disruptive US government shutdown would be avoided bolstered risk appetite, along with hopes for a cooling in the trade dispute between the US and Canada after reports of a positive meeting between US Commerce Secretary Howard Lutnick and Ontario Premier Doug Ford. On the negative side: US consumer sentiment figures showing consumers are much more pessimistic about the outlook, with much higher inflation expectations reflecting the expected impact of US trade tariffs.

Among sectors, best performers were energy, technology, consumer discretionary, communications services, industrials, financials, and materials.

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.