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Home / Business / Dow records the largest one-day fall since October as recession fears take hold

Dow records the largest one-day fall since October as recession fears take hold



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* 2-year, 10-year government yields provide inverter for the first time in 12 years

* Germany and China reports bleak economic data

* Dow sees the biggest one-day fall since October

* Macy's slides after the outlook diminished; roads on rivals

* Index's fall: Dow 3.05%, S&P 2.93%, Nasdaq 3.02% (Updates to market close)

By Stephen Culp

NEW YORK, August 14 (Reuters) – Wall Street sold strong Wednesday as recession fears gripped the market after the US Treasury yield curve was temporarily inverted for the first time in 12 years.

All three major US indices were down about 3%, with the blue chip Dow posting its biggest one-day drop since October after 2-year government yields surpassed interest rates on 10-year bonds, which are considered a classic recession signal.

Cruel economic data from China and Germany suggested a faltering global economy, hit by the increasingly warlike US-China trade war, Brexit wickedness and geopolitical tensions.

Germany reported a contraction in gross domestic product in the second quarter, and China's industrial growth in July hit a low period of 17 years.

"It was all negative and not much positive today," said Chuck Carlson, chief executive officer of Horizon Investment Services in Hammond, Indiana. "We're out of the revenue season and the markets are being battled with news."

"It's a reactionary market right now and probably will continue to be," Carlson added. "My guess is that we'll probably see this soon after Labor Day."

Wednesday was the first time the returns for 2-year and 10-year Treasuries had reversed since June 2007, months before the start of the Great Recession, which crippled the markets for years.

The US yield curve has turned before each recession for the past 50 years.

"It can be different this time," Carlson said. "When you have $ 15 trillion in global government debt for negative returns, it's a new beast.

" While accurate in previewing a recession, it doesn't mean it's coming tomorrow, "he added. [19659002] The CBOE Volatility Index, a measure of investor anxiety, jumped 4.58 points to 22.10.

The Dow Jones Industrial Average fell 800.49 points, or 3.05%, to 25,479.42, the S&P 500 lost 85.72 points, or 2.93%, to 2,840.6, and the Nasdaq Composite dropped 242.42 points, or 3.02%, to 7,773.94.

Over 300 of the S&P 500's components are down 10 % or more from their 52-week highs, according to Refinitive Data, more than 180 of these stocks have fallen more than 20% from their 52-week highs and put them in bear market territory.

All of the 11 major sectors of the S&P 500 closed in negative territory, with energy, economy, material, consumer discretion and communication services all falling 3% or more.

Interest-rate sensitive banks fell 4. 3%.

Macy's Inc's shares plunged 13.2% after the department store operator missed quarterly profit estimates and cut its full-year revenue.

The competing supermarket operators Nordstrom Inc and Kohls Corp slid 10.6% and 11.0% respectively. .

A US control panel for the United States represented Mylan NV and Teva Pharmaceutical Industries Ltd. to turn documents as part of a review of generic price increases.

Mylan fell 8.5% while Teva shares in the US dipped 10.5%.

Facebook Inc gave 4.6% news that the EU's leading regulator is investigating how the social media company handled data during the manual transcription of users' audio recordings.

Final questions exceeded the performers on the NYSE of a 4.44 to 1 ratio; on the Nasdaq favored a 5.33-to-1 ratio decline.

The S&P 500 posted eight new 52-week highlights and 51 new lows; Nasdaq Composite registered 23 new highs and 282 new lows.

The volume of US stock exchanges was 8.68 billion shares, compared to the average of 7.47 billion over the past 20 trading days. (Reporting by Stephen Culp; Additional Reporting by Noel Randewich Editing by Leslie Adler)


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