Stocks plunged Wednesday on deepening worries over a slowdown in the global economy.
The Dow closed down 800 points, or about 3%. Investors have been whipsawed in recent days by mixed signals emerging from the Trump administration about tariffs and the escalating trade war with China.
The jitters were exacerbated amid worrisome economic data from two big countries. Germany posted negative growth in the latest quarter, and China’s growth in industrial output fell to a 17-year low.
An even bigger worry: The yield on the benchmark 10-year Treasury note fell below 2-year Treasurys for the first time since 2007. In other words, you would get a higher interest rate for government debt that matures in two years than in 10 years.
Such an inversion in yields has a strong track record of predicting a recession, especially the longer it continues. Each of the last seven recessions, dating to 1969, was preceded by the 10-year falling below the two-year. […]