Stocks sagged Friday as big technology shares remained under pressure and as Federal Reserve officials spoke of their inflation worries. The Dow Jones industrial average eased 0.5 percent, the S&P 500 lost 1.1 percent and the Nasdaq dropped 1.7 percent. US Treasury yields, fell at the short end but jumped at the long end. The dollar was mixed versus major currencies and oil prices slipped.

Investors appeared inclined to scale back on risk after the S&P 500 set a new closing high on Thursday. Stocks were undercut as long yields rose after Philadelphia Fed President Anna Paulson, a voting member of the FOMC in 2026, spoke of the need to retain inflation credibility. And Cleveland Fed President Beth Hammack, another voting member next year, said she would prefer slightly more restrictive policy.

Big tech including AI shares suffered from rotation into other sectors. Nvidia, the bellwether, was the day's featured loser along with other chipmakers, software, plus energy and machinery. Best performers included pharma, restaurant chains, airlines, and chemicals.

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.