Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Stocks Slammed After Yield Curve Flashes Recession Warning

Published 08/15/2019, 01:43 AM
Updated 09/18/2019, 05:58 PM
© Reuters.
US500
-
DJI
-
BA
-
GS
-
JPM
-
KO
-
MMM
-
AAPL
-
IXIC
-
US2YT=X
-
US10YT=X
-

Investing.com – Stocks plunged Wednesday after a key economic signal flashed a recession warning and both Germany and China showed more signs of slowing growth.

But by mid-afternoon, the major averages were off their lows. The Dow had fallen as many as 760 points.

At 2:10 PM ET (18:10 GMT), the S&P 500 was off 2.5%. The Dow Jones industrials were down 2.5%, and the Nasdaq Composite was off 2.7%.

The emotional catalyst came early in the day when the yield on the 10-Year Treasury note briefly fell below that of the 2-Year Treasury. That suggests investors were unwilling to commit money for longer-term investments.

The 10-year yield was at 1.591% at 1:30 p.m. ET while the 2-year yield was at 1.577%.

The market slump comes in the backdrop of the continuing trade fight between the United States and China, which has hit Chinese exports and exports of a number of U.S. products, especially soybeans.

Slumping exports sent Germany's economy into reverse in the second quarter, while Chinese industrial output growth cooled to a more-than-17-year low in July.

Interest rates globally have fallen as the scope of the slowdown has emerged. The Federal Reserve cut its key interest rate on July 31 in the face of bitter criticism from President Donald Trump. The Fed is expected to cut rates at its meeting in mid-September.

Only one of the Dow stocks was higher, Coca-Cola (NYSE:KO), a classic defensive stock. Boeing (NYSE:BA), Apple (NASDAQ:AAPL), Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM) and 3M (NYSE:MMM) were the biggest contributors to the Dow's decline.

In seven of 11 trading days so far in August, the Dow has risen or fallen more than 275 points during the day.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.