Stocks Drop on Yield Inversion, Then Rally

Stocks rallied Wednesday morning after closing down significantly Tuesday in response to an inversion of the Treasury yield curve, as the rate-indicative 10-year Treasury note fell below that of the two-year note.The rally was attributed to a stabilization of the yield curve, although the curve inverted again early Wednesday, with the two-year Treasury note yielding 4.377% and the 10-year note yielding 4.368%. Tuesday's inversion was the first in five years, and such occurrences have usually been followed by recessions. However, Tomi Kilgore of MarketWatch reported that analysts were arguing for a favorable economic outlook, saying the yield curve is "no longer a reliable indicator of future activity."