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US STOCKS-U.S. stocks stumble on fears of looming recession



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* 2-year, 10-year Treasury yields invert for 1st time in 12 years

* Gloomy economic data from Germany, China

* Macy's slides after FY outlook cut; weighs on rivals

* Rate-sensitive banks slump

* Indexes drop: Dow 2.49%, S&P 2.45%, Nasdaq 2.70% (Updates to late afternoon, changes dateline, byline)

By Stephen Culp

NEW YORK, Aug 14 (Reuters) – Wall Street stumbled on Wednesday as investors fled equities for safe-haven assets, seeking shelter amid gathering signs that a recession could be on the horizon.

All three major US Indexes were sharply lower as short- and long-dated Treasury yields inverted for the first time in 12 years, a potential signal of imminent recession.

Elsewhere, ominous indicators suggested a faltering global economy, hobbled by the intensifying US-China trade war, Brexit jitters and geopolitical concerns. Germany reported a contraction in second-quarter GDP, and China's industrial growth in July hit a 17-year low.

"Every central bank around the world is trying to prop up economies and every politician around the world is trying to destroy economies , "said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. "What's happening in Hong Kong, what's happening with Brexit and the trade war, it's all a mess."

Yields for 2-year and 10-year Treasuries inverted for the first time since June 2007, months before the onset of the great recession, which crippled markets for years.

Such a yield inversion is held by many as a traditional harbinger of recession.

"When you're in an ultra-low interest rate environment like we've been, you I've got to ask if the old metrics still apply, "Pursche added. "My guess is yes."

The CBOE volatility index, a gauge of investor anxiety, jumped 4.26 points to 21.78.

Spot gold prices rebounded, rising over 1% as market participants fled stocks for the precious metal. [19659017] The Dow Jones Industrial Average fell 653.29 points, or 2.49%, to 25,626.62, the S&P 500 lost 71.78 points, or 2.45%, to 2,854.54 and the Nasdaq Composite dropped 216.34 points, or 2.7%, to 7,800.02.

All Of the 11 major sectors in the S&P 500, the largest percentage loss was in the red, with energy and financial suffering.

Interest rate-sensitive banks fell 4.1%.

Tariff-vulnerable chipmakers were also firmly in negative territory, with the Philadelphia SE Semiconductor index down 3.0%.

Macy's Inc's shares plunged 11.5% after the department store missed quarterly profit estimates and cut full-year earnings estimates.

Macy's peers Nordstrom Inc and Kohls Corp slid 10.2% and 11.2 %, respectively.

A US House of Representatives oversight panel called on Mylan NV and Teva Pharmaceutical Industries Ltd to turn over documents as part of a review into generic drug price increases.

Mylan shares fell 7.9% while Teva dipped 9.2%.

The second-quarter earnings season approaches the finish line, with 454 of the companies in the S&P 500 having posted results. Of those, 73.1% beat Street estimates, according to Refinitive data.

Analysts see S&P 500 second-quarter earnings growth of 2.8% year-on-year, per Refinitive.

Declining issues outnumbered advancing ones on the NYSE by a 4.35-to-1 ratio; on Nasdaq, a 5.19-to-1 ratio favored decliners.

The S&P 500 posted eight new 52-week highs and 51 new lows; the Nasdaq Composite recorded 19 new highs and 242 new lows. (Reporting by Stephen Culp; Editing by Lisa Shumaker)


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