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Dow sinks 800 points Wednesday as flashing recession signal rattles stock market

Mark DeCambre

The Dow Jones Industrial Average closed at session lows on Wednesday as investor anxieties about a recession in the U.S. and elsewhere hurt buying. The Dow ended the day 800 points, or 3.1%, lower at 25,479, the S&P 500 index closed down 2.9% at 2,841, while the Nasdaq Composite Index finished 3% lower at 7,773. Part of the impetus for stocks heading sharply lower was an inversion of the 2-year Treasury and the 10-year Treasury notes , which took place at about 6 a.m. Eastern Time. The spread between the 2-year note and the 10-year note temporarily fell to a negative 1 basis point. An inversion of this measure has often preceded an economic downturn. Investors say its powers as a recession indicator comes from its ability to reflect when tight monetary policy is capping growth and inflationary pressures. A yield curve inversion along the 2-year and 10-year spread has come before the last seven recessions.