Stocks rallied Friday after Federal Reserve Chair Jerome Powell appeared to signal a 25 basis point rate cut coming in September. The Dow Jones industrial average advanced 1.9 percent while the S&P 500 gained 1.5 percent and the Nasdaq was also up 1.9 percent. US bond yields and the dollar fell while and oil prices rose.

Gains were across the board after Powell appeared to remove doubts about a September rate by saying it would be appropriate to consider a policy change although he warned policy was not on any preset course. The Dow set a new record high. The S&P 500 snapped a five-day losing streak and the Nasdaq advanced as technology shares rebounded after days of declines. At the other end of the spectrum, small caps had a great day too.

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.