Dow Profits Even When Bond Market Flashes Another Recession Warning
Investors also look forward to Federal Reserve Chairman Jerome Powell's speech at Jackson Hole on Friday as they seek direction for the future of US monetary policy. Stocks ended up mixed, with only Dow ( INDU ) making a profit. The index closed with 0.2%, or 50 points, after turning almost 300 points from positive to negative, and then back. S&P 500 ( SPX ) and Nasdaq Composite ( COMP ) closed 0.1% and 0.4 %,
However, all three indices are on track for their first positive week since the end of July, according to Refinitiv.
The two-year and 1
0-year financial gains turned on Thursday, and just before Wednesday's closing bell, which means that the bond with a shorter date brought more than the longer one. For the second time, this happened this month and the inverted yield curve preceded any recession in the modern era.
Bond yields rose on Thursday morning, drawing investors' attention. The 10-year last year's yield is 1.6114%.
The minutes of the Fed meeting in July showed that the Federal Reserve sees the July rate cut as a correction and wants to keep its options open for future rate cuts. The decrease in July was the first since 2008. Powell is scheduled to speak at 10 a.m. ET on Friday.
So far, interest rate reductions in September are still approximately 94%, down from 98% on Wednesday.  "If Powell refrains from signaling a greater reassurance, he will risk the bond market overreacting and crushing the Treasury yield, possibly raising the argument that we may see negative yields eventually in America, "says Edward Moya, senior market analyst at Oanda.
Investors had an idea of some economic data Thursday morning: unemployment claims and the IHS Markit Purchasing Managers Index for August.
Unemployment claims are lower than expected at 209,000, indicating that the labor market remains strong.  But PMI reiterated a weakness in American manufacturing.
The production index in August dropped to 49.9 – indicating a contraction rather than an expansion of the sector. This is the lowest reported in 119 months according to Markit.
The composite index reached 50.9, less than 52.6 in July, owing to the relative strength in the business of services.