Stocks Rise, Bond Yields Inch Closer to Recession Warning

Stocks Rise, Bond Yields Inch Closer to Recession Warning

US stock indexes rose at the opening and bond yields edged closer to flashing a recessionary warning signal Tuesday.

The technology-heavy Nasdaq Composite led the major indexes in early trading, gaining 1.1%, or about 158 ​​points. The Dow Jones Industrial Average gained about 0.8%, while the S&P 500 added 0.7%. On Monday, major indexes rose after a choppy session, with tech stocks leading gains.

Investors were monitoring peace talks between Russia and Ukraine, which summarized in Istanbul Tuesday for the first time in two weeks. Ukraine has in recent days signaled an openness to a neutral status as part of a peace deal with Russia. The talks, while not yielding a breakthrough, were described by both sides as constructive.

Stock indexes have rallied in recent weeks, reversing much of the losses that came in the wake of Russia’s invasion of Ukraine. Investors have shown calm despite concerns including multidecade high inflation, fresh Covid-19 lockdowns in China and a Federal Reserve that has begun raising interest rates for the first time since 2018.

“Markets seem to have become much more comfortable with the idea that the hiking cycle is here, that it won’t derail economic growth and that equity markets are still the place to be,” said Altaf Kassam, head of investment strategy for Europe, the Middle East and Africa at State Street Global Advisors.

In commodity markets, Brent crude, the international oil benchmark, fell about 4.4% to $101.13 a barrel.

Nielsen Holdings surged more than 21% in early trading after The Wall Street Journal reported that a consortium led by Elliott Management and Brookfield Asset Management were close to buying the company for around $16 billion.

An inversion of the US Treasury yield curve has been seen as a recession warning sign for decades, and it looks like it’s about to light up again. WSJ’s Dion Rabouin explains why an inverted yield curve can be so reliable in predicting recession and why market watchers are talking about it now. Illustration: Ryan Trefes

Shares of LHC Group rose close to 7% after United Healthcare said it would acquire the home-health company for $5.4 billion.

Tesla rose about 0.8%, adding to an 8% rise Monday after the auto maker said it was seeking approval from shareholders to split its stock.

Even stocks were shedding some of their recent gains, with GameStop down about 6.5% and AMC Entertainment about 0.6% lower.

In Europe, shares of auto makers pushed the Stoxx Europe 600 up 1.9%. Barclays fell 2.6%, a second day of losses after the bank admitted to a debt sale mistake that would cost it $591 million.

Investors are keeping an eye on bond markets for a sign many see as an omen of recession. The yield on the benchmark 10-year note slipped to 2.391% from 2.476% on Monday while the 2-year bond’s yield rose to 2.342% from 2.340%, at the previous day’s settlement.

When the shorter-dated bond’s yield rises above the longer-dated 10-year’s, it is known as a yield curve inversion, something that is sometimes considered an indicator of a coming recession.

“There have been more yield curve inversions than recessions but every time there is a recession you can look back and find a yield curve inversion,” said Mr. Kassam.

Traders worked on the floor of the New York Stock Exchange on Monday.


Nicole Pereira/Associated Press

John Williams, president of the New York Federal Reserve, is set to speak later Tuesday, with investors likely to parse his comments for further clues about the central bank’s approach to rate increases. Mr. Williams last week said he was open to a half-percentage-point interest rate increase if warranted by the economy.

In Asia, Japan’s Nikkei 225 rose 1.1% while in Hong Kong, the Hang Seng Index added 1.1%. In mainland China, the Shanghai Composite Index is inched down 0.3%.

Write to Will Horner at

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