The infamous yield curve - the spread between the 2-year Treasury note yield and the 10-year -inverted yesterday morning for the first time in over a decade. This is widely considered a signal of an upcoming economic recession, but that doesn’t have to mean doom and gloom for stock investors.
The Dow had its biggest one-day drop of the year yesterday; it and the S&P 500 both fell by about 3 percent. But over the past few decades, an inversion hasn't always translated to a lasting selloff in equity markets.
On average, since 1978, the S&P 500 has returned 2.5 percent after a yield-curve inversion in the three months afterward. Over the longer term,13.48 percent a year after, 14.73 percent in the following two years, and 16.41 percent three years out, according to Dow Jones Market Data
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