U.S. Markets open in 7 hrs 58 mins

Stocks - Dow Bleeds Heavy Losses as Recession Fears Bite

Investing.com - Stocks on Wall Street fell sharply Friday as part of the yield curve inverted, underscoring concerns about a possible recession amid slowing global growth.

The Dow Jones Industrial Average fell 1.77%, the S&P 500 lost 1.90%, while the Nasdaq Composite slumped 2.50%.

The spread between the 3-Month and 10-Year Treasury yields turned negative for the first time since 2007, sparking widespread selling across markets.

The yield curve serves as screener for the economy. In good economic times, the yields on long-term bonds run higher than short-term bonds as investors expect a booming economy will translate into higher interest rates over the long term.

But for months analysts' have been debating whether the U.S. economy can sustain its growth in the midst of slowing growth elsewhere, particularly in China and Europe.

U.S. government bond yields were also dragged lower by a plunge in the Bund as weaker-than-expected German PMIs renewed fears the euro zone may be heading for a recession.

Financials, mostly banks, were hit the hardest by the swoon in government bond yields, which stifles banks' ability to generate net interest.

Wells Fargo (NYSE:WFC), JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) ended the day deep in the red.

The renewed focus on slowing global growth comes just days after the Federal Reverse cut its growth outlook and signaled it would likley stand pat on interest rates through 2019.

Among corporate earnings, Nike (NYSE:NKE) tumbled more than 6% after it posted fiscal third-quarter sales that fell just short of expectations. But Tiffany & Co (NYSE:TIF) ended up 3.2% after its guidance for modest growth helped it claw back an earlier loss of as much as 2.8%.

Materials stocks also added fuel to selloff pressured thanks to a fall in copper futures on fears that a slowing global economic would hurt demand for industrial commodities.

In a sign of risk aversion, defensive corners of the market proved somewhat resilient as utilities rose 0.69% and consumer staples fell just 0.23%.

On the economic front, existing home sales rebounded and topped economists' estimates, pushing homebuilder stocks higher.

PulteGroup (NYSE:PHM), DR Horton (NYSE:DHI) and Lennar Corporation (NYSE:LEN) ended the day sharply higher.

The rebound in home sales comes as mortgage rates have slumped thanks to the Fed's ongoing pause on monetary policy tightening.

The weekly Freddie Mac survey on mortgage rates, released Thursday, showed a 4.28% rate on a 30-year fixed-rate loan, down from 4.31% a week ago and 4.94% in mid-November.

Top S&P 500 Gainers and Losers Today:

Tiffany & Co (NYSE:TIF), Verizon (NYSE:VZ) and ConAgra Foods (NYSE:CAG) were among the top S&P 500 gainers for the session.

SVB Financial (NASDAQ:SIVB), Brighthouse Financial (NASDAQ:BHF) and United Rentals (NYSE:URI) were among the worst S&P 500 performers of the session.

Related Articles

Stocks - Lululemon, Accenture Jump in Pre-market; Fiat Chrysler Falls

Futures muted with U.S.-China trade negotiations in focus

Too early to assess capital needs in Commerzbank merger: Deutsche Bank