The Dow Jones Industrial Average sank 800 points after the bond market flashed a warning sign about a possible recession for the first time since 2007.
The yield on the 10-year Treasury briefly dropped below the two-year yield Wednesday, an ominous signal that has predicted past recessions.
Investors have been plowing money into long-term U.S. government bonds for months, sending yields sharply lower, as they anticipate slower economic growth.
Macy’s plunged 13% after slashing its full-year profit forecast.
The Dow Jones Industrial Average fell 800 points, or 3%, to 25,479.
The S&P 500 lost 85 points, or 2.9%, to 2,840. The Nasdaq lost 242 points, or 3%, 7,773.
Bond prices soared. The yield on the 10-year Treasury sank to 1.58% from 1.68% Tuesday, a big move.
(AP)
Join the official YWN WhatsApp status
5 Responses
whats a recession ?
What’s going to be
#1,
A recession is: Shabbos after the Cholent you have a cup of Seltzer, go on a walk, go to bed, turn right then left, eat Watermelon/Cherries, if non are available it can be replaced with Strawberries, understood? Me neither,
One thing is for sure, it’s not a walk in the park
Not in the usual sense. The primary, and perhaps exclusive, cause is a breakdown in international trade. Trump can end it by changing policies, while noting that the Republicans have traditionally been for free trade, and the Democrats opposed it. However the collapse of international trade hurts China the most, and puts extreme pressure on their leader (de facto dictator) to make concessions on trade and other policies (e.g. give up opposing democracy in Hong Kong and Taiwan, stop trying to claim ownership of the Philippines and Vietnam’s continental shelf). To exploit the issue, the Democrats have to open themselves up to being “soft on China” and reverse their traditional anti-trade (and pro-American worker) policies. Furthermore, many Americans will benefit from the collapse on international trade since it will force American companies to hire overpaid (by global standards) Americans to do work previously done by underpaid (by American standards) workers elsewhere, and particularly in China.