Wednesday, June 23

Wall Street bogged down by growth worries, falling yields

(Reuters) – Wall Street’s main indexes were lower on Wednesday, as a prolonged inversion in the U.S. treasury yield curve fanned worries of an economic slowdown.

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 26, 2019. REUTERS/Lucas Jackson

The benchmark 10-year Treasury yields slid on Wednesday, but came off 15-month lows reached overnight as investors remained focused on central bank dovishness globally.

The yield curve inverted for the first time since 2007 on Friday and if the inversion continues to persist it could indicate that a recession is likely in one to two years. [US/]

“The yield curve is clearly worth paying close attention to given historical precedence. While recession risk still seems off the table, deceleration is readily apparent,” said Bryan Reilly, a managing director at CIBC U.S. Private Wealth Management in Boston.

Investors have been fretting about slowing economic growth since last week after the Federal Reserve did a stunning about-turn on rate hikes and dour factory data from the United States, Europe and Japan.

The European Central Bank became the latest central bank to delay a planned increase in rates amid rising threats to growth.

“Continuing economic challenges and remarks from the ECB have got equity investors on the cautionary side,” Reilly said.

All the major S&P sectors were trading lower, with healthcare, energy, communication services and technology stocks posting losses of more than 1 percent.

Oil prices sank after government data showed U.S. crude stocks unexpectedly rose last week as exports slowed. [O/R]

At 12:31 p.m. ET the Dow Jones Industrial Average was down 140.77 points, or 0.55 percent, at 25,516.96. The S&P 500 was down 20.44 points, or 0.73 percent, at 2,798.02 and the Nasdaq Composite was down 72.41 points, or 0.94 percent, at 7,619.12.

However, not all data was bleak. A Commerce Department report showed that U.S. trade deficit dropped more than expected in January, likely as Chinese purchases of soybeans spurred a rebound in exports after three straight monthly declines.

Lennar Corp rose 4.4 percent as the No.2 U.S. homebuilder said it expected housing market to improve, driving a 1.3 percent gain in the housing index.

Also helping was a survey that showed mortgage applications in the week ended March 22 rose nearly 9 pct amid lower interest rates, according to the Mortgage Bankers Association.

The Philadelphia chip index fell 1.9 percent after German chipmaker Infineon cut its 2019 revenue forecast, pointing to a weakening Chinese car market, the world’s largest.

Centene Corp’s shares slipped 7.9 percent after the health insurer said it would buy smaller rival WellCare Health Plans Inc for $15.27 billion. Shares of WellCare jumped 9.29 percent.

Declining issues outnumbered advancers for a 1.70-to-1 ratio on the NYSE and for a 2.23-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and five new lows, while the Nasdaq recorded 26 new highs and 49 new lows.

Reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila

Our Standards:The Thomson Reuters Trust Principles.

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