Stocks extended their rally on Tuesday with renewed support from the AI trade. The Dow Jones industrial average firmed 0.3 percent, the S&P 500 gained 0.2 percent and Nasdaq gained 0.8 percent as all three indexes set record closing highs for a second straight day. US Treasury yields were nearly flat, and the dollar and oil prices declined.

Markets remain bullish on expectations for progress on trade disputes with President Trump reaching agreements with Japan on Tuesday and expected to do the same with China on Thursday. Investors also appear positive on the outlook for Federal Reserve rate cuts as the Fed's two-day policy meeting got under way on Tuesday.

Nvidia surged to lead AI shares higher as the market reacted very favorably to comments from Nvidia CEO Jensen Huang on the company's prospects and new partnerships. Among sectors, materials and consumer discretionary joined technology to lead the market higher. Lagging were industrials, financials and consumer staples.

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.