U.S. stocks struggled Thursday as the yield on the 10-year Treasury fell to a three-year low, which many analysts see as a harbinger of recession.
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The yield on the closely watched government bond fell below the psychologically significant level of 1.5 percent as investors moved money out of stocks and into the safety of U.S. debt.
The decline in equities follows a massive plunge on Wednesday when the Dow Jones Industrial Average tumbled 800 points, its biggest drop this year and the fourth-largest drop on record.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 25481.44 | +2.02 | +0.01% |
| SP500 | S&P 500 | 2837.03 | -3.57 | -0.13% |
| I:COMP | NASDAQ COMPOSITE INDEX | 7742.225934 | -31.71 | -0.41% |
Stocks went on a rollercoaster ride in the premarket session, bouncing between gains and losses as China threatened retaliation if Washington goes ahead with planned Sept. 1 tariff hikes.
On Wednesday, global recession fears drove Wall Street investors to the safety of U.S. government debt as the yield curve inverted. That’s when the yield on the 2-year note exceeds the yield on the 10-year Treasury. It has been a relatively accurate indication that a recession is coming in the next 22 months.
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Global growth fears were also part of the selling equation on Wednesday as Germany’s growth contracted and several reports from China indicated slowing of the economy.
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In addition, investors are also concerned about the protests in Hong Kong, where police and protesters faced off again after Trump appeared to tie a U.S. trade deal with China to a humane resolution of the protests.
There were some bright spots. Walmart shares traded higher after reporting that second-quarter U.S. comparable sales topped expectations and the retailer boosted its earnings forecast for the year.
Also U.S. retail sales jumped in July as various goods were purchased. The Commerce Department said retail sales rose 0.7 percent
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| WMT | WALMART INC. | 110.72 | +4.52 | +4.26% |
| JCP | J.C. PENNEY | 0.59 | +0.02 | +3.40% |
| CSCO | CISCO SYSTEMS INC. | 46.23 | -4.38 | -8.65% |
| GE | GENERAL ELECTRIC COMPANY | 7.89 | -1.14 | -12.57% |
In other earnings, J.C. Penney reported a smaller-than-expected second-quarter loss, lifting shares.
Cisco Systems shares fell after the company forecast current-quarter profit below Wall Street estimates.
General Electric shares took a hit it after Harry Markopolos, the whistleblower in the Bernard Madoff Ponzi scheme case, said GE’s financial filings were masking the depths of its financial problems. He posted a research report accusing GE of hiding $38.1 billion in potential losses and asserted that the company’s cash situation was far worse than it had disclosed. GE said it “stands behind its financials” and operates to the “highest-level of integrity” in its financial reporting in a statement to Reuters.
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In other economic news, the number of Americans filing applications for unemployment benefits increased more than expected last week. Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 220,000.
The Associated Press contributed to this article.
