The Nasdaq Composite rose on Thursday, while the S&P 500 gained slightly, as bond yields fell and Wall Street continued to weigh recession risks.
The Dow Jones Industrial Average fell 54 points, or 0.2%. The S&P 500 rose 0.2%, while the tech-heavy Nasdaq Composite rose 0.8%.
Those moves come as the yield on the 10-year Treasury note fell to its lowest level in about two weeks, or below 3.1%, as investors pondered the likelihood of a recession. Yields move inversely to prices.
Federal Reserve Chairman Jerome Powell discussed monetary policy with congressional lawmakers for a second day Thursday. On Wednesday, Powell said the central bank is “strongly committed” to reducing inflation. He also noted that a recession is a “possibility,” a fear that continues to weigh on Wall Street.
“We’re definitely going to go into a recession. It remains to be seen how bad that recession will be,” said Nick Giacoumakis, president of NEIRG Wealth Management.
“It depends on so many factors that I don’t think anyone can pinpoint whether it’s going to be a very, very deep and hard recession or whether it’s going to be a hard landing in a milder recession.”
UBS is the latest investment bank to raise its odds of a recession to 69% this week, citing lackluster data last week on housing, industrial production and capital goods.
“We are now watching for any further negative follow-through or if we simply hit a local peak and some growth momentum in hard data resumes,” UBS said in a note on Thursday.
Citigroup raised its odds of a recession to 50%, citing a drop in consumer demand that could make it harder for the Federal Reserve to pull off a soft landing.
Goldman Sachs said the probability of a recession is “higher and more front-loaded” than before. In a note on Monday, the firm raised its bet on a US recession to 30%, from 15%, over the next year.
Separately, a top JPMorgan strategist said Thursday that he believes the US economy will dodge a recession altogether and the stock market will recoup losses in the second half of the year.
On Thursday, the Labor Department said weekly U.S. jobless claims fell 2,000 to a seasonally adjusted 229,000 for the week ending June 18, though the job market remains tight.