U.S. stock futures fell below the flatline in the early hours of Wednesday as the yield curve inverted briefly on Monday, sparking recession fears amid the intensifying geopolitical unrest and inflationary pressures.
Futures on the Dow Jones Industrial Average (DJIA) dipped 0.27% while S&P 500 (SPX) futures shed 0.32% and Nasdaq 100 (NDX) futures lost 0.44%, as of 5:15 a.m. EST, Wednesday.
The yield curve, which tracks bond yields with different maturities, normally moves upwards. However, when the curve moves downwards, it indicates that long-term bonds have a lower yield than short-term debt instruments, hinting at pessimism among investors about near-term prospects of the economy. This pessimism may be a result in the fear of a recession hovering on the horizon.
Nonetheless, investors largely dismissed the recession concerns up to Tuesday, as the most important and closely watched yield spread that is between the 2-year and the 10-year rate, drew near the point of inverting but remained positive.
Interestingly, the market has climbed almost 10% in the last 10 days, and the Dow and S&P 500 recorded their fourth straight day of gains at the closing of Tuesday’s regular trading session. The Dow and S&P 500 increased 0.97% and 1.23% respectively, while the Nasdaq 100 gained 1.84% at the closing bell yesterday.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure.
