Wall Street flat on recession fears, energy shares offer support

Wall Street treaded water on Wednesday after moves in the U.S. bond market brought back fears of a recession as a bruising U.S.-China trade war drags on, while a rise in energy shares offered support.

U.S. stocks opened lower in the session, tracking losses from Tuesday, as a key part of the U.S. yield curve, closely watched for signs on economic downturn, inverted to levels not seen since 2007.

The inversion continued to deepen, with the yield on the 30-year government bonds US30YT=RR hovering just above its record low set earlier in the session.

“Each time (the yield curve) inverts, people get a little uncomfortable,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“But for it to be a true sign of an impending recession, it has to invert and stay inverted. We have not seen that yet.”

In a bright spot, the S&P 500 energy sector .SPNY jumped 1%, tracking gains in oil prices, which rose after industry data showed a fall in stockpiles of U.S. crude.

The recent bout of selloff has dragged the benchmark S&P 500 5.5% away from a record high hit in late July.

Markets have been roiled by the trade war, which worsened last week after Beijing announced retaliatory tariffs on U.S. goods.

Investors are also awaiting the monthly jobs report and manufacturing data next week to gauge the pace of interest rate cuts.

At 10:01 a.m. ET, the Dow Jones Industrial Average was up 19.53 points, or 0.08%, at 25,797.43, the S&P 500 .SPX was up 0.36 points, or 0.01%, at 2,869.52. The Nasdaq Composite .IXIC was down 21.71 points, or 0.28%, at 7,805.23.

Among those left most vulnerable to the bitter trade relations between the United States and China were technology stocks .SPLRCT, which slipped 0.77%. Hurting the sector the most were declines in shares of Microsoft Corp and Autodesk Inc .

Autodesk shares slumped 11.7%, the most on the S&P 500, after the AutoCAD software maker cut its full-year earnings forecast.