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WASHINGTON (Reuters) – US stocks fell on Wednesday early in the session following the reversal of the yield curve, raising fears of a serious slowdown or recession and increasing pressure on the Federal Reserve.
The Dow Jones lost more than 600 points, about 2.3%. The Standard & Poor's 500 index was also down 2.3%. Oil prices have also fallen.
The inverted curve (negative yield curve) means that a one-year bond will bring treasury bonds to more than 10 years, contrary to the logic of investment, first reflection of the yield curve from the bond since 2007.
This reversal is usually a sign of an impending recession, unless the government or the central bank intervenes successfully. German data also rocked investors, showing that Europe's largest economy contracted in the second quarter – and perhaps even in recession.
The decline has erased yesterday's gains, as markets rebounded sharply at the announcement of US President Donald Trump's withdrawal of some of his threats to impose additional duties on Chinese products on next month.
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