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The Dow is little changed as it struggles to rebound from worst day of 2019

CNBC logo CNBC 8/15/2019 Yun Li

© Spencer Platt / Getty   Stocks rose on Monday, gaining back some of the steep losses in the previous session, after indications that Chinese negotiators may be willing to compromise with the U.S. on trade issues.

Markets swung higher after Hua Chunying, a spokesperson at China’s Ministry of Foreign Affairs, said China “hopes the U.S. will meet China halfway and implement the consensus reached by the two leaders during their meeting in Osaka.”

The Dow Jones Industrial Average climbed about 30 points, rebounding slightly from its worst day of the year. The S&P 500 rose 0.1% and the Nasdaq Composite was little changed.

Also helping the market on Thursday were a slew of economic data that showed a relatively strong U.S. economy. Retail sales rose solidly in July and beat expectations, which is a sign of consumer optimism. The U.S. productivity also grew a healthy 2.3% rate in the second quarter.

Walmart reported better-than-expected earnings and raised its outlook for the full year, sending its stock 5.5% higher Thursday.

Stocks were lower earlier in permarket on Thursday after China said it has to take necessary counter-measures to the latest U.S. tariffs on $300 billion of Chinese goods, adding the U.S. tariffs violated a consensus reached by leaders of two countries.

Thursday’s session follows the Dow’s 800-point loss on Wednesday amid a recession signal from the bond market. The stock market took a huge hit in the previous session with the Dow plunging 800 points in its fourth-largest point drop ever to a two-month low. The Dow’s 3% drop was the worst this year. The S&P 500 also fell nearly 3%.

Cisco shares plunged 9% in premarket trading after it said future earnings would be lighter than expected because of a “significant impact” from the U.S.-China trade war. The tech giant also said China revenue fell 25% last quarter on an annualized basis.

Shares of General Electric dropped more than 5% after Madoff whistleblower Harry Markopolos said he has discovered “an Enronesque business approach that has left GE on the verge of insolvency. ”

The massive sell-off Wednesday was triggered by a bond market phenomenon where the yield on the benchmark 10-year Treasury note briefly broke below the 2-year rate. The inversion of this key part of the yield curve has been a reliable indicator of economic recessions.

As of Thursday morning, the curve hovered around the inversion point. The yield on the 30-year Treasury bond also fell to a new historic low.

“The 2-10 inversion is sending a massively negative signal that stocks are having a difficult time ignoring,” Adam Crisafulli, a J.P. Morgan managing director, said in a note on Wednesday.

Bank stocks, which got pounded on Wednesday from the inverted yield curve, continued their slide on Thursday. Citigroup fell 0.7% and Bank of America is down 0.8%.

Investors remained on edge about the trade tensions between the U.S. and China. President Donald Trump in a tweet after the bell Wednesday linked the trade battle to the increasingly violent protests in Hong Kong, further complicating the trade issue. But he also proposed a personal meeting between him and Chinese President Xi Jinping.


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