Stocks were mostly weaker Wednesday as the market gave back some of its recent gains after unimpressive results in US-China trade talks. The Dow Jones industrial average was flat while the S&P 500 eased 0.3 percent and the Nasdaq lost 0.5 percent. US Treasury yields and the dollar declined while oil prices surged.

Markets saw a muted response to news late Tuesday that the US and China had agreed to implement the agreement reached last month in Geneva while loosening Chinese curbs on sales of rare earths and US limits on chip exports. The deal did not represent a significant breakthrough in trade relations and left tariffs at significant levels. Better news came from lower than expected consumer price figures showing feared inflationary effects from tariffs did not materialize in May. Investors continue to expect tariff-related price increases to appear in upcoming CPI reports.

Among stock sectors, consumer discretionary lagged amid concern that imports of Chinese goods would be hurt by high tariff levels. Materials suffered as US steelmakers were hit by a report that the US and Mexico were nearing a deal to allow more steel imports from Mexico with reduced tariffs. On the positive side, energy stocks outperformed as oil prices rallied amid rising Middle East tensions.

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.