NEW YORK (Reuters) - The S&P 500 recovered from steep early losses to end slightly higher on Wednesday as investors snapped up oversold shares and bond yields rebounded from significant lows that raised fears about a recession.
Increasing worries over a global economic downturn and bets the Federal Reserve will have to pick up its pace of interest rate cuts pushed Treasury yields sharply lower early, with 10-year yields touching their lowest since October 2016.
Ten-year yields began to cut their earlier decline in afternoon trading after a soft auction.
That recovery in yields helped stocks, which have been tracking the movement in 10-year yields, said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
“The 10-year yield has come to represent all of the concerns about global growth at this very moment, so the stock market has latched onto it, like a kid to a lollipop. So when yields started to rise today, the stock market started to rise,” he said.
“I wouldn’t expect the market to shoot back to its high. We could be stuck in a range as this stuff sorts itself out.”
During the session, the premium on three-month Treasury bill rates over 10-year Treasury yields, a closely watched U.S. recession indicator, was at its most elevated levels since March 2007.
Financials were the biggest loser among S&P 500 sectors, down 1.2%, while the staples and materials indexes ended up more than 1% each.
Investors also were attracted to some bargains in shares after the recent selloff. The S&P 500 is down 4.7% since its July 26 record high close.
The Dow Jones Industrial Average fell 22.45 points, or 0.09%, to 26,007.07, the S&P 500 gained 2.21 points, or 0.08%, to 2,883.98 and the Nasdaq Composite
