Investors went running for the hills on spiking fears of a recession after the U.S. Treasury yield curve temporarily inverted for the first time in 12 years.
The Dow dropped 800 points or 3.05%, its worst percentage decline of the year; only three stocks on the S&P 500 - Newmont Goldcorp, Ventas and Evergy - finished with gains.
The yield on the 10-year note fell below the yield on the 2-year note for the first time since 2007, an inversion that has preceded each recession since 1980; the average length of time between the first inversion and the start of each recession since 1980 has averaged 18 months, but investors today were not waiting around.
When the dust settled, both the 2-year and 10-year yields stood at 1.58%, marking respective declines of 9 and 10 basis points; the 30-year yield hit a record low at 2.02% before finishing the session down 11 bps at 2.03%.
Global economic data added to the gloomy sentiment, as China reported its slowest industrial production growth since 2002 and Germany reported a 0.1% decline in Q2 GDP.
Bank stocks were battered alongside bond yields, with Bank of America, Citigroup and J.P. Morgan all falling more than 4%; the financials sector (-3.6%) is now in correction territory, down more than 10% from a recent high.
An even bigger loser than the financial sector was energy (-4.1%), as WTI September crude oil plunged 3.3% to $55.23/bbl; the utilities sector (-0.9%) was the only group that did not finish lower by at least 1%.
Retailers were hit hard after Macy's provided disappointing earnings and guidance, which sent shares 13% lower and pressured the top retail ETF (-4.2%).
Now read: Stocks extend decline to nearly 3% »
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