US stocks fell in early trading on Wednesday as the yield curve reversed, raising fears of a serious slowdown or recession and mounting pressure on the Federal Reserve.
The Dow fell more than 600 points, or about 2.3 percent. The Standard & Poor´s 500 Index was also down 2.3 percent. Oil prices also fell.
The inverted curve (negative yield curve) means that a one-year bond will yield more than 10-year treasury bonds, contrary to investment logic, the first reflection of the bond yield curve since 2007.
This reversal is generally an indication of a looming recession, unless successful intervention by the government or central bank occurs. Data from Germany also shook investors, showing Europe´s largest economy contracted in the second quarter - and possibly its recession.
The decline erased yesterday´s gains, as markets rebounded sharply as news of US President Donald Trump´s retreat from some of his threats to impose additional duties on Chinese products next month.
