U.S. Markets closed

Dow ends around 800 points lower after bond market flashes recession signal

William L. Watts

Stocks tumbled Wednesday after the main measure of the U.S. yield curve briefly inverted, heightening worries about a potential recession. The Dow Jones Industrial Average dropped around 801 points, or 3%, to end near 25,479, according to preliminary figures, while the S&P 500 dropped around 86 points, or 2.9%, to close near 2,841. The Nasdaq Composite shed around 242 points to close near 7,774, a loss of 3%. Weak economic data out of the China and Europe had heightened worries about global economic growth, but a rally in the Treasury market that saw the yield on the 10-year note trade below the yield on the 2-year note for the first time since 2007 -- a phenomenon seen as a potential recession indicator -- accelerated a selloff in stock-index futures ahead of the opening bell. Stocks were under pressure throughout the trading session, posting broad losses that left all 11 S&P 500 sectors and all 30 components of the Dow in negative territory. Banking stocks, which are sensitive to yields and the shape of the curve, were hard hit, with the S&P 500 financial sector falling 3.6%.