Stocks continued to rise on Wednesday on carry-over from their rally on Tuesday after a US inflation report that seemed to leave open prospects for multiple Federal Reserve rate cuts. The Dow Jones industrial average gained 1.0 percent, the S&P 500 firmed 0.3 percent and the Nasdaq edged up by 0.1 percent. US bond yields dropped, while oil prices and the dollar declined.

Treasury Secretary Scott Bessent's call on the Fed to cut rates by 50 basis points after the weak jobs report added to buzz in the market about that prospect but it is not seen as likely. On the other hand, comments from Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic suggested officials are not entirely convinced a September rate cut makes sense. Markets are pricing in a near-certain 25 basis point rate cut in September and likely additional 25 basis points in October and December.

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.