Stocks edged down Monday with pressure from rising bond yields as markets await the Federal Reserve policy announcement on Wednesday. The Dow Jones industrial average lost 0.5 percent, the S&P 500 eased 0.4 percent and the Nasdaq slipped 0.1 percent. US Treasury yields and the dollar rose while oil prices fell.

Markets continue to expect a split decision favoring a 25 basis point rate cut but many analysts are saying the Fed majority will approve a relatively hawkish statement setting a high bar for more rate cuts pending clarity on the economy and the inflation outlook. Presumably that view on the policy outlook would limit rate cuts in the first half of 2026 but President Trump's appointee as Fed chair is expected to drive a more dovish policy stance after that.

Among sectors Monday, big technology favorites were mostly lower to weigh on the major indexes and investor sentiment. Other lagging sectors included energy, health & personal care, home builders, apparel and chemicals. Holding up best were banks, railroads, semiconductors, utilities, and managed care.

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.