Wall Street flat on recession fears, energy shares offer support

NEW YORK: Wall Street treaded water on Wednesday after moves in the US bond market brought back fears of a recession as a bruising U.S.-China trade war drags on, while a rise in energy shares offered support.

US stocks opened lower in the session, tracking losses from Tuesday, as a key part of the US yield curve, closely watched for signs on economic downturn, inverted to levels not seen since 2007.

The inversion continued to deepen, with the yield on the 30-year government bonds hovering just above its record low set earlier in the session.

“Each time (the yield curve) inverts, people get a little uncomfortable,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“But for it to be a true sign of an impending recession, it has to invert and stay inverted. We have not seen that yet.” In a bright spot, the S&P 500 energy sector jumped 1%, tracking gains in oil prices, which rose after industry data showed a fall in stockpiles of US crude.

The recent bout of selloff has dragged the benchmark S&P 500 5.5% away from a record high hit in late July.

Markets have been roiled by the trade war, which worsened last week after Beijing announced retaliatory tariffs on US goods.

Investors are also awaiting the monthly jobs report and manufacturing data next week to gauge the pace of interest rate cuts.

At 10:01 a.m. ET, the Dow Jones Industrial Average was up 19.53 points, or 0.08%, at 25,797.43, the S&P 500 was up 0.36 points, or 0.01%, at 2,869.52. The Nasdaq Composite was down 21.71 points, or 0.28%, at 7,805.23.

Among those left most vulnerable to the bitter trade relations between the United States and China were technology stocks, which slipped 0.77%. Hurting the sector the most were declines in shares of Microsoft Corp and Autodesk Inc.

Autodesk shares slumped 11.7%, the most on the S&P 500, after the AutoCAD software maker cut its full-year earnings forecast.

Coty Inc rose 4.8% after the cosmetics maker raised its full-year revenue forecast, betting on a multi-year turnaround plan that involves increased investments in advertising and cost cuts.

Shares of Hewlett Packard Enterprise Co added 3% after the company beat profit estimates and raised its 2019 adjusted earnings forecast.

Advancing issues outnumbered decliners by a 1.41-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and 38 new lows, while the Nasdaq recorded nine new highs and 118 new lows.

A gauge of equities worldwide shed early losses on Wednesday as Wall Street stocks rose despite looming recession jitters, while sterling tumbled as Britain’s prime minister moved to restrict parliamentary time before the country’s planned departure from the European Union.

The British pound dropped sharply after Prime Minister Boris Johnson set Oct. 14 as the date for the formal state opening of a new session of parliament. The opening limits the time the parliament would sit before the planned date for Brexit on Oct. 31. The news stoked fears of an economically disruptive no-deal departure from the EU.

Sterling was last down 0.45% against the dollar at $1.2232.

Benchmark 10-year Treasury notes last rose 7/32 in price to yield 1.4677%, from 1.49% late on Tuesday.

In currencies, the dollar index rose 0.15%. The Japanese yen weakened 0.13% versus the greenback at 105.89 per dollar, but remained close to the 2-1/2-year high of 104.44 it hit on Monday.

Among commodities, spot gold dropped 0.4% to $1,536.45 an ounce, though not far off its six-year peak touched on Monday.

Spot silver added 0.6% to $18.27 an ounce after having hit $18.50, its highest level since April 2017.

Oil prices jumped as data showing a fall in US crude stockpiles helped ease worries about weakening oil demand caused by the China-U.S. trade war. US crude rose 2.15% to $56.11 per barrel and Brent was last at $60.61, up 1.85% on the day.

Gold eased on Wednesday on a stronger dollar and as investors locked profits following the more than 1% jump in the last session, but uncertainty over US-China trade and the global economy kept safe-haven bullion near a multi-year peak.

Spot gold fell 0.3% to $1,537.16 per ounce at 11:09am. On Monday it touched $1,554.56, its highest since April 2013.

US gold futures fell 0.3% to $1,546.80 per ounce.

“We aren’t seeing any additional tensions. A lot of the news - the trade war and economic concerns - has been factored in by the market over the last few days,” said David Meger, director of metals trading at High Ridge Futures, adding profit-taking following the rally in response to a firmer dollar was weighing on gold.

Agencies