Stocks drop sharply after bond market warns again of recession

Stocks drop sharply after bond market warns again of recession

Stocks sank Wednesday after the bond market threw up one of its last remaining warning flags on the economy’s health. NEW YORK — Stocks sank Wednesday after the bond market threw up one of its last remaining warning flags on the economy. The yield on the 10-year Treasury note briefly dropped below the two-year Treasury’s yield Wednesday morning. It’s rare for short-term yields to be higher than longer-term ones, and when it happens, market watchers call it “an inverted yield curve” and brace for the possibility of a recession hitting in a year or two. As of 1:10 p.m. ET, the Dow Jones industrial average had dropped more than 700 points, or 2.73%. Weak economic data around the world also unnerved investors, who flipped back into selling mode after driving a rally Tuesday on hopeful signals that the U.S.-China trade war may not be worsening so much. The German economy, Europe’s largest, shrank 0.1% in the spring from the first three months of the year due to the global trade war and troubles in the auto industry. Data from China, the world’s second-largest economy, also showed that factory output, retail spending and investment weakened in July. “The bad news for global economies is stacking up much faster than most economists thought, so trying to keep up is exhausting,” Kevin Giddis, head of fixed income capital markets at Raymond James, wrote in a report. “The relief rally inspired by the Trump administration delaying tariffs on some Chinese imports was short […]

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