The stock market was mixed in choppy trading on Tuesday even as investors returning from the holiday weekend faced renewed fears of a looming global recession, especially amid warning signs in the bond market as the closely watched yield curve inverted.
Stocks pared back losses: The Dow Jones Industrial Average fell 0.4%, over 100 points, while the S&P 500 gained 0.2% (after declining as much as 2% earlier in the day) and the tech-heavy Nasdaq Composite jumped 1.8%.
Investor sentiment took a hit after the bond market flashed a major recession warning, with the benchmark 10-year Treasury note trading below the short-term 2-year Treasury, a so-called yield curve inversion.
A closely-watched recession indicator on Wall Street, the yield curve has already inverted twice so far this year, first on March 31 then again briefly in mid-June.
Markets are coming off of their worst first half of a year since at least 1970, with the S&P 500 in bear market territory as surging inflation and rate hikes from the Federal Reserve stoke rising recession risks.
Though US markets were closed for the July 4th holiday, global recession fears continued to rise after volatile trading in European markets, with the euro sliding to a 20-year low against the US dollar on Tuesday.
“Most people are still looking at market advances with skepticism,” and sentiment is “hardly bullish,” says Vital Knowledge founder Adam Crisafulli. “Investors are very anxious about the approaching earnings season,” he notes.