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US equities are struggling as Treasury yields fall



U.S. stocks struggled Thursday as returns on the 10-year Treasury fell to a three-year low, something many analysts see as a harbinger of recession.

The return on the closely monitored government bond fell below the psychologically significant level of 1.5 percent as investors moved money out of stocks and into the security of US debt.

The fall in shares follows a huge fall on Wednesday as the Dow Jones Industrial Average tumbled 800 points, the largest fall this year and the fourth largest fall in the mail.

Ticker Security Last Change % Chg
In: DJI DOW JONES AVERAGES 25504.04 +24.62 + 0.1
0% [19659014] SP500
S&P 500 2835.59 -5.01 -0.18%
I: COMP NASDAQ COMPOSITE INDEX 7735.951324 -37.99 % [19659024] Shares went on a rock-and-dale tour in the premarket session, bouncing between gains and losses that China threatened retaliation if Washington continues with scheduled toll rises on September 1.

On Wednesday, the global recession frightened Wall Street investors to the security of US government debt as the yield curve reversed. This is when the return on the 2-year note exceeds the return on the 10-year Treasury. There has been a relatively accurate indication that a recession is coming over the next 22 months.

Global growth fear was also part of the sales equation Wednesday as Germany's growth coincided and several reports from China indicated that the economy was declining. [19659027] MORE FROM FOXBUSINESS.COM

In addition, investors are also concerned about the protests in Hong Kong, where police and protesters met again after Trump appeared to tie a US trade agreement with China to a humane resolution of the protests. [19659002] There were some bright spots. Walmart shares traded higher after reporting that U.S. comparable sales in the second quarter exceeded expectations, and the retailer increased its earnings forecast for the year.

Also, US retail sales jumped in July when various items were purchased. The Commerce Department said retail sales increased by 0.7 percent

Ticker Security Load Change % Chg
WMT WALMART INC. 111.16 +4.96 [19659013] + 4.67%
JCP JC PENNEY 0.58 +0.01 + 2.51%
CSCO CISCO SYSTEMS INC. 46.24 -4.37 -8.63%
GE GENERAL ELECTRICAL COMPANY 8.08 -0.95 -10.52%

In other income JC Penney reported a smaller loss than expected in Q2, lifting shares.

Cisco Systems shares fell after the company projected profits for the current quarter under Wall Street estimates.

General Electric shares got a hit after Harry Markopolos, the whistleblower in the Bernard Madoff Ponzi scheme, said GE's financial filings mask the depth of its financial problems. He released a research report that accused GE of hiding $ 38.1 billion in potential losses, claiming the company's cash situation was far worse than it had revealed. GE said it "stands behind the economy" and operates to the "highest level of integrity" in its financial reporting in a statement to Reuters.

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In other economic news, the number of Americans applying for unemployment benefits increased more than expected last week. The original state unemployment benefit requirements increased 9,000 to a seasonally adjusted 220,000.

The Associated Press contributed to this article.


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