U.S. stocks swung between small gains and losses Thursday as upbeat data on Americans’ spending habits helped to ease investor fears about a coming recession.
The Dow Jones Industrial Average rose 25 points, or 0.1%, a day after the blue-chip index slid 800 points–its biggest decline this year. The S&P 500 added less than 0.1%, and the Nasdaq Composite slipped 0.2%.
Investor angst eased after data showed U.S. shoppers increased their spending in July. Retail sales, a measure of purchases at stores, restaurants and online, climbed a seasonally adjusted 0.7% in July from a month earlier, the Commerce Department said Thursday.
Meanwhile, Walmart raised its outlook after posting stronger-than-expected results, another boost for the retail sector. Its shares rose 5.7%. Several other retailers including Target, Home Depot and Lowe’s are scheduled to report earnings next week, providing a clearer picture of the broader health of the sector.
The moves come a day after long-term bond yields fell below shorter-term rates. That inversion of the yield curve sent a fresh warning about the risks of a coming recession.
“Most of the attention has been on an inversion of the yield curve,” said Stefan Hofer, chief investment strategist at LGT Bank Asia. “The market is looking at warning signals, but it’s not yet fully convinced that we’re in danger of a global recession or a major downturn,” he said.
However, Mr. Hofer said while previous inversions often preceded recessions, the yield curve’s predictive power had been distorted by massive asset purchases, or quantitative easing, by central banks.
Earlier Thursday, China said it plans to push back against proposed U.S. tariffs. The U.S. decision to levy new tariffs “severely violated” the consensus reached previously between President Trump and President Xi Jinping, China’s Customs Tariff Commission of the State Council said in an online post, citing an unnamed official.
“China is prepared to escalate this one as much as the U.S.,” said Chris Beauchamp, chief market analyst at investment firm IG Group. “The ball seems to be in China’s court at this time, and it’s beginning to spook markets.
Meanwhile the yield on the benchmark 10-year Treasury note extended its decline, touching 1.578% after hitting 1.574% Wednesday. Yields fall as prices rise.
Investors’ appetite for very long-term bonds saw strong demand for 30-year Treasurys, pushing up their prices and cutting their yields to less than 2% for the first time ever during Asian trading hours. The yield was at 2.012%, according to Tradeweb.
In Thursday’s action, networking-equipment giant Cisco Systems fell 6.3% on a disappointing forecast for the current quarter, and General Electric dropped 6.4% after a research report alleged the struggling conglomerate has masked the depths of its problems, resulting in inaccurate and fraudulent financial filings with regulators.