Ukrainian servicemen as seen on the checkpoint in the Independence Square on March 30 in Kyiv, Ukraine. Local officials reported fresh attacks on the outskirts of Kyiv, despite yesterday's announcement from Russia that it would "reduce military operations
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Positive momentum in the major indexes ran out Wednesday as a resurgence in Russian military activity overshadowed good news on the employment front.
Less than a day after pledging to pull back operations in Kyiv, Russian forces reportedly shelled the Ukrainian capital and attacked several areas on the country's eastern border. The resurgent violence propelled energy prices, with U.S. crude oil futures up 3.4% to $107.82 per barrel. That in turn fueled energy stocks (+1.2%), the top-performing sector of the day.
Investors showed little interest in an ADP report that showed 455,000 new private payrolls in March – some 5,000 jobs higher than estimates, albeit the smallest gains since August of last year.
"Of particular interest was job growth witnessed in the natural resources and mining sector," says Peter Essele, head of portfolio management for Commonwealth Financial Network. "The large expansion in payrolls in the sector is a reaction from producers looking to quickly ramp up output to take advantage of multi-decade highs in commodity prices while they last.
"The result should be more supply in commodity-related materials as the year progresses, which could help alleviate pricing pressures over the long term."
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Regardless, stocks broadly retreated after several days of gains. The Nasdaq Composite dropped 1.2% to 14,442, the S&P 500 was off 0.6% to 4,602 and the Dow Jones Industrial Average slipped 0.2% to 35,228.
YCharts
Other news in the stock market today:
We mentioned yesterday that the bond market saw a potential "2-and-10" yield curve inversion. We say "potential" because not all data providers saw it that way, but Wall Street is nonetheless expressing worry about this respected market signal.
For the uninitiated: A 2-and-10 yield curve inversion is when the yield on the shorter-term two-year Treasury note actually exceeds the 10-year Treasury's yield – and it has predicted a host of U.S. economic recessions over the past century-plus.
But there are a few asterisks attached, and this inversion's particular circumstances have at least a few strategists saying this time, things really might be different.
"Don't fear yield curve inversion. It is not the standalone indicator of recessions as it once was," says Ethan Harris, head of global economics research at BofA Securities, who adds that this most recent signal is "heavily distorted by the Fed's massive balance sheet and extremely low bond yields overseas."
So, what exactly does this mean for the U.S. economy – and, by extension, for the U.S. stock market? We explore the history of the yield curve inversion and stocks' surprising track record in the wake of this ominous signal.
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