NEW YORK (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 were the biggest loser among S&P 500 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 fell 22.45 points, or 0.09%, to 26,007.07, the S&P 500 gained 2.21 points, or 0.08%, to 2,883.98 and the Nasdaq Composite 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.

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The energy sector was down 0.8% after oil prices slid.

On the plus side, CVS Health Corp shares climbed 7.5% after the drugstore chain raised its full-year profit forecast.

Walt Disney Co dropped 4.9%, a day after its quarterly earnings missed analysts’ forecast on higher investments in its streaming platform.

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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.