U.S. Stocks Pare Losses After Brutal Drop but Recession Fears Linger

U.S. stocks finished mixed on Monday, as investors parsed through the results of the Mueller investigation and weighed the bond market’s latest recessionary signal.

Dow Erases Losses

The major indexes pared losses in the final hour of trading, with the Dow Jones Industrial Average coming off a loss of 130 points to settle slightly higher. The ow closed on a gain of 14.51 points, or 0.1%, to 25,516.83. Boeing Co (BA) was the index’s best performer, climbing 2.4%. Caterpillar Inc. (CAT) added 1.3%.

The broad S&P 500 Index of large-cap stocks closed down 0.1% at 2,798.36. It was down by as much as 0.5%. Losses were mainly concentrated in the information technology and financials sectors.

Slumping tech shares weighed on the Nasdaq Composite Index, which fell by as much as 0.8%. It closed down 0.1% at 7,637.54.

Global Markets Sink

Asian and European stocks declined Monday in the wake of a rare yield-curve inversion in the U.S. bond market. On Friday, the yield on the U.S. 10-year Treasury note fell below the yield on the 3-month T-Bill for the first time since mid-2007. Under normal circumstances, yields on shorter-term bonds are less than longer-dated ones. An inverted yield curve is considered to be one of the best predictors of recession for the world’s largest economy.

Read more: Dow Plunges 460 Points on Ominous Recession Signal; Bitcoin Extends Weekly Gain.

Asian markets were the hardest hit Monday, falling in lockstep with Wall Street’ slump at the end of last week. Japan’s benchmark Nikkei 225 plunged 3%, or 650.23 points, to close at 20,977.11. Tokyo’s broader Topix index fell 2.5%, or 39.70 points, to 1,577.41.

In China, the Shanghai Shenzen CSI 300 Index fell 2.4% to 3,742.83.

Europe’s major indexes were down at least 0.2% on Monday, though the U.K.’s benchmark FTSE 100 Index fell 0.4% to close at 7,177.58.

Mueller Probe Exonerates Trump

On Sunday, Attorney General William Barr exonerated President Donald Trump of any criminal wrongdoing associated with Russian interference in the 2016 election following a two-year investigation into the matter.

“The Special Counsel did not find that the Trump Campaign, or anyone associated with it, conspired or coordinated with the Russian Government,” Barr said in a statement, referring to the results of Special Counsel Robert Mueller’s investigation.

In a Sunday Twitter post, Trump said: “No Collusion, No Obstruction, Complete and Total EXONERATION. KEEP AMERICA GREAT!”

The results should remove the impeachment cloud hanging over Trump and provide a sense of stability on the president’s next two years in office. Analysts say this could strengthen the administration’s hand in securing new trade deals and in adopting new policies that could strengthen the economy. Neil Dutta, head of economics at Renaissance Macro Research, believes “Trump could start implementing measures to boost the economy this summer to support his 2020 reelection efforts.”

Featured image courtesy of Shutterstock. Chart via Stockcharts.com.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi