A correction in growth and momentum shares, especially Nvidia, Palantir, and other high-flying artificial intelligence stocks, undercut equities Tuesday though the broad market held up well.

The Dow Jones industrial average was unchanged while the S&P 500 lost 0.6 percent and the Nasdaq dropped 1.5 percent. US bond yields, the dollar, and oil prices rose.

Megacap growth sold off with Meta, Microsoft, Netflix and Tesla leading the way down while cyclicals and value stocks outperformed. Uncertainty around the economic outlook including the course of Federal Reserve policy and the impact of President Trump's tariffs gave investors an excuse to pause the ongoing tech-led rally on a quiet day for other news. The market fully expects a 25 basis point rate cut from the Fed in September but the outlook after that becomes uncertain, as does the impact of Trump's tariffs.

Among sectors, in addition to tech, worst performers were medical technology, aerospace and defense, banks, and entertainment. Best were homebuilders, road and rail, parcels and logistics, apparel, home electronics and home improvement.

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.