S&P 500 falls as rising T-yields trigger recession fears

The S&P 500 fell on Thursday and US bond yields jumped as Fed officials signaled their rate-hiking campaign to slow inflation is not over.

The Dow Jones Industrial Average was little changed, after falling as much as 314 points in the session. The S&P 500 slipped 0.25%, while the Nasdaq Composite dipped 0.02%.

Stocks rebounded from lows reached earlier in the day as shares of Cisco Systems jumped more than 4%. The networking equipment company surpassed expectations in its fiscal first-quarter report, and issued upbeat guidance. Other tech stocks such as Apple and Intel also led gains.

Investors digest comments by St. Louis Fed President James Bullard, who said in a speech Thursday that “the policy rate is not yet in a zone that may be considered sufficiently restrictive.”

“The change in the monetary policy stance appears to have had only limited effects on observed inflation, but market pricing suggests disinflation is expected in 2023,” added Bullard.

The policy-sensitive 2-year Treasury yield jumped to 4.465% Thursday, raising fears higher rates would send the economy into a recession.

Stocks vulnerable to a recession and higher rates led losses in the S&P 500. Materials stocks declined, as did consumer discretionary names. Defensive stocks such as health care outperformed.