Some investors believe that a recession warning that has been flashing on Wall Street for the past year may be sending a false signal and that the Federal Reserve will be able to tame inflation and still escape a deep downturn.

The signal — called the yield curve — has continued to reverberate in 2023 and is now sending its strongest warning since the early 1980s of a coming downturn. But despite the alarms becoming louder, the stock market has rallied and the economy has remained resilient, prompting some analysts and investors to rethink its predictive power. On Wednesday, the Consumer Price Index report showed a sharp decline in inflation last month, further buoying investor optimism and pushing stocks higher.