On Wall Street on Thursday, stock indexes were flipping between gains and losses until a late-day bounce gave the market a modest gain. 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 major U.S. stock indexes spent much of the day reacting to big moves in U.S. government bond yields, which fell sharply in the early going, fluctuated for much of the day, and then recovered some of their decline by mid-afternoon.
U.S. government bonds in the past have been used to signal the earliest warnings about the economy. The S&P 500 rose 7 points, or 0.2%, to 2,847.60. The benchmark index swung between a 0.6% gain and 0.5% loss. A day earlier, it plunged 2.9%. The Dow Jones Industrial Average, coming off its worst day of the year, gained 99.97 points, or 0.4%, to 25,579.39. The Nasdaq composite dropped 7.32 points, or 0.1%, to 7,766.62, while the Russell 2000 index of smaller companies lost 5.87 points, or 0.4%, to 1,461.65.
Markets around the world have jerked up and down for weeks. Prices for everything from stocks to gold to oil have been heaving as investors flail from one moment of uncertainty around President Donald Trump's trade war to another around what central banks will do with interest rates.
The U.S.-China trade war has hammered American manufacturers and roiled global financial markets with fears that the world's largest economy could slip into a recession. Yet most analysts expect the U.S. economy to power through the rough patch, at least in the coming months, on the strength of solid consumer spending and a resilient job market.
The U.S. stock market plunged earlier this week when the bond market sent a possible early warning sign of a recession ahead: The yield on the benchmark 10-year Treasury note slipped briefly below 2-year Treasury yields.
Trump again defended his trade war 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.
"Nonetheless, the wider point is that with U.S.-China uncertainties still elevated, we are acutely aware that signs of risk aversion being reined in must not be mistaken for risk eliminated," said Vishnu Varathan of Mizuho Bank in Singapore.
ENERGY: Benchmark U.S. crude added 72 cents to $55.19. It fell 76 cents to $54.47 per barrel Thursday. Brent crude, the international standard, rose 67 cents to $58.90. CURRENCIES: The dollar slipped to 106.13 Japanese yen from 106.23 yen Thursday. The euro weakened to $1.1102 from $1.1150.