Published 1:23 PM EDT Aug 14, 2019
Stocks accelerated their declines in late afternoon trading Wednesday after economic indicators from Germany and China renewed recession fears.
Traders instead poured into safer investments, triggering a dire sign in the bond market: The yield on the 10-year Treasury fell below the yield on the two-year. That hasn’t happened since 2007 and, historically, an inverted yield curve signals an economic slowdown is coming.
The Dow Jones Industrial Average lost 729 points, or 2.77%, 25,551, while the Standard & Poor’s 500 index dropped 82 points, or 2.8%, to 2,844.
The tech-heavy Nasdaq composite plunged 246 points, or 3.07%, to 7,769.
The key downward driver in markets on Wednesday was news that Germany, Europe’s biggest economy, contracted 0.1% in the second quarter of the year from the previous three-month period as global trade conflicts combined with troubles in the auto industry.
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Figures overnight also showed how China is suffering from the trade conflict with the United States. Chinese factory output, retail spending and investment weakened in July, suggesting the world’s second-largest economy faces downward pressure on growth.
Factory output rose 4.8% over a year earlier, a marked decline from June’s 6.3%. Retail sales growth slowed to 7.6% from the previous month’s 9.8%. Investment in real estate and other fixed assets also weakened.
On Tuesday, stocks had one of their better days recently after the Office of the U.S. Trade Representative said it would delay the tariffs on some products, including popular consumer goods, until Dec. 15. A few other products were removed altogether, including certain types of fish and baby seats.
“The relief rally inspired by the Trump administration delaying tariffs on some Chinese imports was short lived,” said Fiona Cincotta, senior market analyst at City Index. “Blink and you missed it.”
Contributing: Associated Press