US stocks snap slide as Treasuries retreat

NEW YORK: US stocks halted a two-day sell-off that took major indexes to multimonth lows, with groups battered by the trade tensions leading the rebound. Treasury yields steadied near their lowest since 2017.

The S&P 500 pushed back toward the 2,800 level after closing below it for the first time since March. Chipmakers and industrial shares paced the gain. 

A fresh batch of economic data suggested the expansion was on firm footing before the Trump administration escalated the trade war earlier in May. 

U.S. equities have plunged 5% in the month. The 10-year Treasury yield was at 2.25% after falling as low as 2.21% Wednesday, while the dollar traded at a five-month high.

Turbulence in stocks and the march lower in bond yields this week suggest investors are increasingly coming to terms with an uncertain outlook for markets. 

The possibility that Beijing may cut exports of rare-earth minerals, along with signs that U.S.-EU talks aren’t going anywhere meaningful, are adding to trade tensions. 

Meanwhile, bond markets are flashing a warning, with the yield gap between three-month and 10-year Treasuries, often watched as an early signal of pending recession, sliding to a 2007 low Wednesday.

"What’s going on in Treasury markets is ultimately a repricing of growth expectations,” John Bilton, head of global multi-asset strategy at JPMorgan Asset Management, said on Bloomberg TV.

 "We don’t see a recession coming in the next 12 months even allowing for the yield-curve inversion we’ve seen, typically that’s a signal that has a long lead time.”

The Stoxx Europe 600 climbed, led by media firms, a day after posting its biggest drop in nearly three weeks. Asian markets were mixed, with Shanghai edging lower as China notched a fresh escalation of the tariff war by putting U.S. soybean purchases on hold.

Elsewhere, oil traded around $59 a barrel after the release of an industry report showing a much bigger-than-expected drop in U.S. crude stockpiles.

Here are some key events coming up:

* China provides a first peek at its May economic performance on Friday, with economists anticipating the official manufacturing PMI will tick down to 49.9 amid the worsening trade war with the U.S.
    
* On Friday, data is due on the Fed’s preferred measure of price pressures; the gauge, which excludes food an energy, is forecast to be steady at an annual 1.6%. - Bloomberg