U.S. stocks made modest gains in Thursday’s midday trading, recovered a little of the ground lost in Wednesday’s drastic three percent fall. The S&P 500 advanced four-tenths of a percent from Thursday’s open.
Analysts say an encouraging report on retail sales reassured nervous investors, at least for the moment.
Consumer demand is the largest driver of the U.S. economy, and retail sales rose a healthy seven-tenths of a percent last month. Walmart, the world’s largest retailer, posted its best monthly sales so far this year. Consumers gained confidence because of low unemployment and modestly rising wages.
Other sectors of the economy have weakened recently, including business investment and factory production amid worries of a trade war between the United States and China, the world’s two largest economies.
The mix of economic signals was evident in global stock market action Thursday.
The key market in France was down more than one percent, Britain and Germany posted smaller losses.
In Asia, Japanese stocks fell Thursday, while Shanghai and Hong Kong made modest gains.
Analysts pointed to weak German and Chinese economic data as warning signs of a possible world economic slowdown. But most importantly, the analysts pointed to a so-called yield curve inversion for interest rates on two- and 10-year U.S. Treasury notes.
Typically, interest rates on government bonds held for a long time are higher than those held for shorter periods.
But the reverse was in effect Wednesday and the analysts see it as a sign that investors have worries about the immediate state of the U.S. economy.
It was the first time such an interest rate inversion had occurred since 2007, at the start of the U.S. recession that was the country’s worst economic downturn since the Great Depression of the 1930s.