US stocks mixed as rising shares of retailers offset sinking Treasury yields

U.S. stocks closed mixed Thursday as shares of big retailers climbed, which helped offset the effect of 10-year Treasury yield tumbling to a three-year low, a possible harbinger of recession.

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The yield on the closely watched government bond fell below the psychologically significant level of 1.5 percent as Wall Street investors moved money out of stocks and into the safety of U.S. debt. Further, the yield on the 30-year Treasury fell to 1.98 percent -- a record low.

On the upside, though, Walmart shares traded higher after reporting that second-quarter U.S. comparable sales topped expectations and the retailer boosted its earnings forecast for the year.

TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES26770.2-255.68-0.95%
SP500S&P 5002986.2-11.75-0.39%
I:COMPNASDAQ COMPOSITE INDEX8089.54332-67.31-0.83%

J.C. Penney reported a smaller-than-expected second-quarter loss, lifting shares.

Also, U.S. retail sales jumped in July as various goods were purchased: The Commerce Department said retail sales rose 0.7 percent.

Thursday's trading action followed a massive plunge on Wednesday when the Dow Jones Industrial Average tumbled 800 points, its biggest drop this year and the fourth-largest drop on record.

Global recession fears drove Wall Street investors to the safety of U.S. government debt as the yield curve inverted. That's when the yield on the 2-year note exceeds the yield on the 10-year Treasury. It has been a relatively accurate indication that a recession is coming in the next 22 months.

Global growth fears were also part of the selling equation on Wednesday as Germany's growth contracted and several reports from China indicated slowing of the economy.

In addition, investors are also concerned about the protests in Hong Kong, where police and protesters faced off again after Trump appeared to tie a U.S. trade deal with China to a humane resolution of the protests.

Stocks went on a rollercoaster ride in Thursday's premarket session, bouncing between gains and losses as China threatened retaliation if Washington goes ahead with planned Sept. 1 tariff hikes.

Analysts cautioned against pessimism. Brad McMillan, chief investment officer for Commonwealth Financial Network, said there are several reasons for Wall Street to keep calm.

"Although the recent drop is worrying, it is also normal," McMillan said to FOX Business. "In fact, it is consistent with the market’s rational efforts to price in the effects of both a slowing economy—not a recession — as well as the ongoing trade confrontation."

TickerSecurityLastChangeChange %
WMTWALMART INC.119.14-0.70-0.58%
JCPJ.C. PENNEY1.00-0.01-0.99%
CSCOCISCO SYSTEMS INC.46.71-0.32-0.68%
GEGENERAL ELECTRIC COMPANY8.96-0.08-0.89%

Cisco Systems shares fell after the company forecast current-quarter profit below Wall Street estimates.

General Electric shares took a hit it after Harry Markopolos, the whistleblower in the Bernard Madoff Ponzi scheme case, said GE's financial filings were masking the depths of its financial problems. He posted a research report accusing GE of hiding $38.1 billion in potential losses and asserted that the company's cash situation was far worse than it had disclosed. GE said it "stands behind its financials" and operates at 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 filing applications for unemployment benefits increased more than expected last week. Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 220,000.

"Despite the headlines and the concern, the market is still within 6 percent of its all-time high, and only back to levels of a couple of months ago," McMillan said. "As pullbacks go, this remains a mild one. Although we should keep an eye on both the market and the economy — and there are indeed signs of risk — the trend remains positive.

The Associated Press contributed to this article.