The Dow Jones staggered toward one of its worst losses of 2019 as the world economy potentially spiraled toward a brutal recession. | Source: Source: REUTERS / Brendan McDermid
The bears were out in force as the mighty German economic machine contracted, Chinese data missed estimates, Hong Kong wallowed in chaos, and bond yield curves inverted in the US and UK.
Dow Dives More than 2%
As of 1:49 pm ET, the Dow Jones Industrial Average had lost a staggering 606 points or 2.31%. The index last traded at 25,673.
The S&P 500 and Nasdaq also crashed more than 2.3% after US Treasury bonds suffered their first main yield curve inversion since the financial crisis.
The fact that a US 2-year note yielded more than a 10-year is a significant worry for Dow bulls given that this has heralded every major recession in the United States since 1956.
BAML: “For the ten [2/10] inversions back to 1956, the S&P 500 topped out within approximately three months of the inversion six times (1956, 1959, 1965, 1973, 1980, and 2000).
The S&P 500 took 11 to 22 months to peak after the other four inversions (1967, 1978, 1989, and 2005)
— Carl Quintanilla (@carlquintanilla) August 14, 2019
The fear looks even more justified in the broader context of a world ravaged by slowing economies and simmering trade war tensions.