US Stocks Steady After Plunge, But Caution Still Reigns (Update)
By Stan Choe
Stocks around the world remained stuck in the spin cycle Thursday, as worries about a possible recession collided with hopes that the strongest part of the U.S. economy _ shoppers spending at stores and online _ can keep going.
The S&P 500 clawed back some of its steep loss from a day earlier, when stocks tumbled after a fairly reliable warning signal of recession emerged from the bond market. Stocks in Asia and Europe, meanwhile, sank after China said it would take ``necessary countermeasures'' if President Donald Trump follows through on a threat to impose tariffs on more than $100 billion of Chinese goods on Sept. 1.
The U.S. bond market, which has been among the loudest and earliest to cry out warnings about the economy, also continued to show concern as yields fell.
Trading was again turbulent, and markets around the world jerked up and down Thursday as they've been doing for weeks. Prices for everything from stocks to gold to oil have been heaving as investors flail from one moment of uncertainty around Trump's trade war to another around what central banks will do with interest rates.
In the U.S., Walmart shares surged 4.3% and helped to steady the market after it said it made a bigger profit in the last three months than Wall Street expected, thanks in part to strong online sales of groceries. A separate government report also showed that retail sales across the country last month rose more than economists expected.
The S&P 500 was up 0.5%, as of 12:08 p.m. Eastern time after flipping between a loss of 0.2% and a gain of 0.6% through the morning. A day earlier, it plunged 2.9%.
The Dow Jones Industrial Average rose 125 points, or 0.5% to 25,604, and the Nasdaq composite rose 0.3%.
Consumer spending makes up the bulk of the U.S. economy, and shoppers have been carrying the economy recently amid worries that businesses will pull back on their spending due to all the uncertainty created by the trade war. Other economies are slowing as the trade war is doing damage to manufacturers around the world.
Those concerns helped drive the yield on the 10-year Treasury down to 1.53% Thursday from 1.58% late Wednesday. That yield has been steadily dropping since late last year, when it was above 3%.
The 10-year yield has sunk so much that it dropped below the yield of the two-year Treasury Wednesday, a rare occurrence and one that has historically suggested a recession may be a year or two away.
The 30-year Treasury yield fell to 1.99% from 2.02% and earlier touched a record low, a sign of concern among investors. When worried about weaker economic growth and inflation, they tend to pile into Treasurys, which pushes up their prices and in turn pushes down yields.
``The countdown to a recession has just started,'' said Hussein Sayed, Chief Market Strategist at FXTM.
Trump again defended his trade war Thursday and said a resolution with China has ``got to be a deal, frankly, on our terms.''
After being hopeful earlier this year that a trade agreement may be imminent between the world's two largest economies, investors are increasingly digging in for the tensions to drag on for years.
The trade war isn't the only worry for investors. The United Kingdom's pending exit from the European Union, political unrest in Hong Kong and a totally separate trade war between South Korea and Japan are all adding to the gloom.
The worries have pulled the S&P 500 down 4.3% so far this month, while other markets are down even more sharply. The S&P 500, though, remains within 6% of its record set late last month.
``The fact is that no one actually knows what is next for the markets,'' said Fiona Cincotta, senior market analyst at City Index. ``However, the signs flashing from the markets are not great.''
Cisco Systems plunged 7% for one of the sharpest losses in the S&P 500 after the technology giant gave a profit forecast that fell short of some analysts' expectations. Technology stocks in the S&P 500 were weak in general, but gains for stocks of companies that sell consumer products, and tend to hold up in times of economic weakness, helped offset them.
Besides Walmart's surge, Procter & Gamble and Coca-Cola each rose 1.8%.
In Europe, Germany's DAX sank 0.7%, while France's CAC 40 lost 0.3%. The FTSE 100 in London dropped 1.1%.
Japan's Nikkei 225 fell 1.2%, and the Hang Seng in Hong Kong rose 0.8%.
Commodity prices, which have been swinging sharply on worries that a weaker global economy will dent demand, were lower. Benchmark U.S. crude fell 71 cents to $54.52 per barrel. Brent crude, the international standard, lost $1.34, or 2.3%, to $58.14.
Gold, which has rallied when worries about the economy have grown, added $3.10 to $1,530.90 per ounce.
The Canadian Press & the Associated Press. All rights are reserved.
US Stocks Cling to Modest Aains Amid Recession Fears Wall Street stocks clung to narrow gains early Thursday following mixed US economic data in a choppy followup to the Dow's worst session of the year.
US indices briefly veered into negative territory shortly after the opening bell, but were all positive after 20 minutes.
The Dow Jones Industrial Average stood at 25,529.18, up 0.2 percent. The blue-chip index lost 800 points, or more than three percent, on Wednesday.
The broad-based S&P 500 added 0.3 percent at 2,847.58, while the tech-rich Nasdaq Composite Index edged up 0.1 percent to 7,784.48.
Major US indices plunged Wednesday after a key US bond benchmark raised recession worries amid mushrooming fears of a global slowdown due in part to the US-China trade war.
Thursday's tentative start to trading came after CNBC reported that a Chinese official said it hoped to "meet the US halfway" on trade, comments that were viewed by some investors as conciliatory, even as other observers said the statement was not new.
US retail sales jumped 0.7 percent in July, topping expectations and reassuring investors that US consumers remain on strong footing.
But on the downside, US manufacturing production dropped 0.4 percent during the same month, as the trade war weighed on the sector.
Among individual stocks, Walmart surged 5.2 percent as it raised its full-year forecast on better-than-expected results, while fellow Dow member Cisco Systems slumped 5.9 percent following a disappointing forecast.
US Long Term Mortgage Rates Stay Near Historic Lows
U.S. long-term mortgage rates remained near historically low levels this week against a backdrop of volatile financial markets around the globe.
Mortgage buyer Freddie Mac says the average rate on the benchmark 30-year loan was unchanged at 3.60%, its lowest level since November 2016. A year ago the rate stood at 4.53%.
The average mortgage rate for 15-year, fixed-rate home loans edged up to 3.07% from 3.05% last week.
Continued anxiety over the U.S.-China trade war and slowing global economic growth made for a rocky ride in the markets. On Wednesday, U.S. stocks plunged after the bond market sent out a fairly reliable warning signal of recession.
The whipsawed markets have sent investors fleeing from stocks to the safety of bonds, pushing bond interest rates to record lows.
The Canadian Press & the Associated Press. All rights are reserved.