US STOCKS-S&P 500 erases big losses to end up; investors buy bargains, yields off lows

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* U.S. 10-year yields fall
* Disney drops after earnings miss
* Indexes: Dow down 0.09%, S&P up 0.08%, Nasdaq up 0.38%

(Updates to close)
By Caroline Valetkevitch
NEW YORK, Aug 7 (Reuters) - The S&P 500 recovered from steep
early losses to end slightly higher on Wednesday as investors
snapped up oversold shares and bond yields rebounded from
significant lows that raised fears about a recession.
Increasing worries over a global economic downturn and bets
the Federal Reserve will have to pick up its pace of interest
rate cuts pushed Treasury yields sharply lower early, with
10-year yields touching their lowest since October 2016.
Ten-year yields began to cut their earlier decline in
afternoon trading after a soft auction. That recovery in yields helped stocks, which have been
tracking the movement in 10-year yields, said Michael Antonelli,
market strategist at Robert W. Baird in Milwaukee.
"The 10-year yield has come to represent all of the concerns
about global growth at this very moment, so the stock market has
latched onto it, like a kid to a lollipop. So when yields
started to rise today, the stock market started to rise," he
said.
"I wouldn't expect the market to shoot back to its high. We
could be stuck in a range as this stuff sorts itself out."
During the session, the premium on three-month Treasury bill
rates over 10-year Treasury yields, a closely watched U.S.
recession indicator, was at its most elevated levels since March
2007.
Financials .SPSY were the biggest loser among S&P 500
.SPX sectors, down 1.2%, while the staples and materials
indexes ended up more than 1% each.
Investors also were attracted to some bargains in shares
after the recent selloff. The S&P 500 is down 4.7% since its
July 26 record high close.
The Dow Jones Industrial Average .DJI fell 22.45 points,
or 0.09%, to 26,007.07, the S&P 500 .SPX gained 2.21 points,
or 0.08%, to 2,883.98 and the Nasdaq Composite .IXIC added
29.56 points, or 0.38%, to 7,862.83.
Interest rates futures suggested traders are building bets
the Fed will cut interest rates three more times by year-end.
Central banks in New Zealand, India and Thailand on
Wednesday cut their lending rates amid growing fears that the
U.S.-China trade war could aggravate a slowdown in the global
economy.
Trade concerns re-emerged after President Donald Trump last
week threatened to slap 10% levies on the rest of $300 billion
of Chinese imports and called China a currency manipulator on
Monday. The energy sector .SPNY was down 0.8% after oil prices
slid.
On the plus side, CVS Health Corp CVS.N shares climbed
7.5% after the drugstore chain raised its full-year profit
forecast.
Walt Disney Co DIS.N dropped 4.9%, a day after its
quarterly earnings missed analysts' forecast on higher
investments in its streaming platform.
Declining issues outnumbered advancing ones on the NYSE by a
1.04-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and 31 new lows; the
Nasdaq Composite recorded 41 new highs and 212 new lows.
Volume on U.S. exchanges was 9.05 billion shares, compared
to the 7.1 billion average for the full session over the last 20
trading days.