Hopes for positive trade news and for Federal Reserve rate cuts bolstered stocks Wednesday. The Dow Jones industrial average was flat, the S&P 500 firmed 0.5 percent and the Nasdaq advanced 0.9 percent. US Treasury yields, the dollar and oil prices all rose. The S&P 500 and Nasdaq closed at record highs.

News that the US and Vietnam had reached a trade pact raised hopes for more trade agreements ahead of President Trump's July 9 tariff pause deadline. Separately, the monthly ADP report showing a surprising drop in payrolls during June added to expectations that a slowing labor market will spur rate cuts. Investors will watch the monthly Labor Department report to see if it confirms the dropoff in hiring suggested by the ADP report. The Econoday consensus forecast looks for nonfarm payrolls up 110,000 in the latest month but the market whisper number is 80,000-90,000.

Among stocks, select megacaps provided leadership to the upside including Apple and Tesla. Strength in Nvidia inspired chipmakers generally. Winning sectors included airlines, homebuilders, energy, industrial metals, chemicals, and credit cards. Companies with Southeast Asia exposure outperformed on the Vietnam news.

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.