The Dow plummeted 350 points as the first main yield curve inversion since 2007 ignited panic on Wall Street. | Source: Drew Angerer / Getty Images / AFP
By CCN Markets: The Dow whipsawed back into decline on Wednesday, completely reversing Tuesday’s massive recovery.
What triggered the plunge? The bond market just flashed a warning signal that has preceded every recession for the past five decades.
Dow Plummets; S&P 500 and Nasdaq Struggle
All of Wall Street’s major indices suffered steep declines at the opening bell. The Dow Jones Industrial Average plunged 400 points at the open. A minor bounce reduced that decline to 351.99 points or 1.34%, bringing the DJIA to 25,927.92.
The S&P 500 slid 38.23 points or 1.31% to 2,888.09. The energy sector led the retreat, plummeting 2.59% as a group.
The Nasdaq suffered the worst decline, falling 120 points or 1.5% to 7,896.32.
Yield Curve Inversion Triggers Recession Alarms, Economic ‘Doom and Gloom’
Investors panicked, and stocks plunged, after the main yield curve inverted for the first time since 2007.
A “yield curve inversion” occurs when the yield on a longer-term bond dips below that of a shorter-term note. The “main yield curve” tracks the relationship between 10-year and 2-year bonds.
On Wednesday, 10-year Treasury yields dipped to 1.623%, just below the 1.634% yield on the 2-year note.
U.K. bonds also suffered an inversion, with 10-year yields sliding to 0.475% while 2-year yields ticked up to 0.478%.
The yield on the 2-year and 10-year US Treasury bonds inverted on Wednesday for the first time since the financial crisis. » Read Full Article «