Traders work on the floor at the New York Stock Exchange, August 13, 2019.
Eduardo Munoz | Reuters
Stock futures indicated some optimism after first opening the overnight session lower. That follows the Dow Jones Industrial Average’s worst day of the year on Wednesday amid a recession signal from the bond market.
Dow futures were up 114 points, as of 10:35 p.m. ET Wednesday, implying an opening gain of 110.58 points for the index on Thursday. S&P 500 and Nasdaq futures also pointed to opening gains on Thursday for the two indexes.
The stock market took a huge hit in the previous session with the Dow plunging 800 points in its fourth-largest point drop ever to a two-month low. The Dow’s 3% drop was the worst this year. The S&P 500 also fell nearly 3%.
The massive sell-off was triggered by a bond market phenomenon on Wednesday where the yield on the benchmark 10-year Treasury note briefly broke below the 2-year rate. The inversion of this key part of the yield curve has been a reliable indicator of economic recessions.
“The 2-10 inversion is sending a massively negative signal that stocks are having a difficult time ignoring,” Adam Crisafulli, a J.P. Morgan managing director, said in a note on Wednesday.
The weak economic data around the world also fueled concerns that the global slowdown could tip the U.S.