A selloff in U.S. stocks accelerated into Wednesday afternoon after the bond market flashed its brightest warning signal yet presaging a potential recession. When it was all said and done, the three major indices booked their worst session of 2019.
Here were the main moves in the market, as of 4:00 p.m. ET:
• S&P 500: -2.93%, or 85.72 points
• Dow: -3.05%, or 800.49 points
• Nasdaq: -3.02%, or 242.42 points
• 10-year Treasury yield: -9.1 bps to 1.589%
The yield on the 2-year U.S. Treasury note rose above that of the 10-year U.S. Treasury just after 6 a.m. ET Wednesday, marking the first inversion of this closely watched portion of the yield curve in more than a decade. Inversions of the yield curve – or when shorter-term yields rise above longer-term yields – are taken as bearish signals, since they indicate investors have less confidence in the short-term outlook and are instead bidding up Treasurys on the longer end of the curve.
Wednesday afternoon, President Donald Trump weighed in with a Twitter post:
..Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!
— Donald J. Trump (@realDonaldTrump) August 14, 2019
On Wednesday, signs of a slowdown abroad mounted further, with new data showing output in China’s key industrial sector fell to a more than 17-year low, amid an ongoing trade war with the U.S.
MacDailyNews Note: Jonathan Golub, chief U.S. equity strategist at Credit Suisse, discusses the Treasury yield curve, Federal Reserve policy and the U.S. economy. He speaks on Bloomberg Surveillance:
CNBC’s Jim Cramer discusses his take on Wednesday’s market action:
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