Dow drops 400 points as fear mount

The Dow slumped 350 points, or 1.4%, Wednesday afternoon. The index was short of over 400 points, dropping below 25,000. Dow has not closed below this level for four months.

The renewed market turbulence reflects deeper concerns about the collapse of the collapse of the talks between the Trump administration and China. Investors fear that tariffs – and China's retaliation – will slow the world economy and give corporate profits.

"Trade negotiations have stopped. It's putting fear of people and getting them to move out of stocks," said marketing advisor Ryan Nauman at Informa Financial Intelligence's Zephyr.

Cash has rushed to the security of government bond yields, sending 1[ads1]0-year government bond yields down to its lowest levels since late 2017.

The yield curve – the gap between short-term and long-term bond yields – has again reversed. Previously, it has been a reliable prerequisite for any setbacks.

"The curve being reversed can become a self-fulfilling prophecy," said Michael Block, market strategist at Third Seven Advisors. "It's freaking hell out of everyone."

The recent market has erased about 6% of the S & P 500 since it finished at record high at the end of April. Dow has fallen five consecutive weeks, the longest weekly decline since 2011.

Oil, Copper Drought

Energy stocks have also been crushed, driven lower by tolling oil prices. US oil fell 2.5% on Wednesday among concerns about rising inventories and how trade war will affect demand.

Apache ( APA ) Baker Hughes 19659011] ( BHGE ) and Marathon Oil ( MRO ) fell about 3% piece.

Copper, another economically sensitive product, fell 1.2% to four months down.

  European officials warn that US stocks are overpriced
There has been renewed concern over recent days about how China will repay against US tariffs. One concern is that Beijing will place restrictions on rare earth exports, elements that are crucial to the production of smartphones, rocket systems, and other high-tech devices. About 80% of all rare earth minerals imported to the United States come from China.

The decline fears excessive

Dow has lost about 6% in May, so it is on the right track for its first losing month in 2019. Dow has not had a drop in May since 2012. CNN Business Fear & Greed Index flashes "fear", compared to "greed" a month ago.

The wave of sales brought back memories from December, when financial and commercial delivered the worst month on Wall Street since Great Depression. The extreme turbulence ended almost a decade-long beef market in US stocks.

"I don't think this is the start of a bear market," Block says.

Although the yield curve has inverted and production is struggling, other economic indicators look relatively healthy. Most likely, the United States added 263,000 jobs in April and reduced unemployment to a 49-year-old low of 3.6%.

"While fears are fully justified in terms of rates and weaknesses abroad, the US economy is still very solid," said Mike Lowengart, E * Trade Investment Strategy Investment Director.

Investor moves into secure ports as tools and bonds, Lowengart says, "doesn't mean we're anywhere near a recession."

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