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Stocks are little modified as investors monitor recession signals, falling oil prices

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U.S. stocks hovered near the flat line on Wednesday after the market staged an enormous midday reversal on Tuesday.

The Dow Jones Industrial Average gained 19 points, or about 0.1%. The S&P 500 and Nasdaq Composite were flat.

Investors gave the impression to be drifting back into defensive stocks on Wednesday, with utility company Constellation and pharmaceutical giant Merck among the many top performers within the S&P 500. Shares of Walmart rose 1.4%.

Wednesday’s moves follow an intraday reversal within the previous session. The S&P 500 rallied back from a 2% loss in the ultimate hours of trading on Tuesday and finished the day up 0.2%. The tech-heavy Nasdaq Composite outperformed, jumping 1.75%. The Dow lost 129 points, but was down greater than 700 points at one point.

Investors continued to fret about whether the economy is falling right into a recession after the benchmark 10-year U.S. Treasury yield fell below the 2-year yield. The so-called yield curve inversion historically has been a warning sign that the economy could also be falling or has already fallen into recession.

Oil prices tumbled below $100 a barrel Tuesday, further reflecting a possible economic slowdown, and slipped further on Wednesday. Shares of Chevron and Exxon dropped greater than 1% on Wednesday, extending declines from the previous session.

Some Wall Street analysts say a recession could possibly be mild. On Tuesday Credit Suisse said it sees the U.S. dodging a recession because it slashed its year-end S&P 500 goal to reflect the effect of upper capital cost on stock valuations.

“[The market] has been bracing for [a recession], and now it may very well be embracing it, the thought being: let’s just get it over with, we’re going have a recession, let’s do it. Let’s clean out the excesses and begin all all over again,” said Ed Yardeni of Yardeni Research on CNBC’s “Closing Bell: Additional time.”

“The market is beginning to look ahead into next yr and that would thoroughly be a recovery yr from whatever this recessionary environment seems to be,” he added. “We’re all sort of doing a Hamlet recession – to be or to not be. I’m sort of pondering that there is going to be a light recession.”

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NewEdge Wealth chief investment officer Cameron Dawson echoed that sentiment.

“Do we have now a sort of drawdown that appears to be in that 30% range, which is the typical for recessions, or something that appears closer to down 50%, which is what we saw back within the early 2000s and 2008 where we had two debt crises?” she said. “We do not see a debt crisis. We predict that we could start to search out some value around that 3,400-3,500 level because that is what gets us back to the pre-Covid highs.”

There aren’t any major earnings reports scheduled for Wednesday, but there will likely be a slew of economic reports coming out, including the minutes of the Federal Reserve’s June meeting within the afternoon.

Mortgage demand fell week over week at the same time as rates declined, in keeping with the Mortgage Bankers Association. The Institute for Supply Management services PMI data got here in higher than expected, but did show a slight slowdown in growth. Job openings also got here in higher than expected, at greater than 11 million.

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