Stocks sank sharply Wednesday morning after the U.S. bond market signaled an impending recession.
The Dow Jones Industrial Average, S&P 500 and the Nasdaq composite all dropped more than 1 percent as trading opened Wednesday, with shares of banks leading the losses.
The sell-off came shortly after the yield on 10-year U.S. Treasury bonds fell below the yield on two-year bonds for the first time since 2007. When 10-year bonds trade cheaper than 2-year bonds, a recession tends to follow within 12 to 18 months.
The Dow dropped more than 700 points, a 2.7-percent decline, shortly after 1 p.m. The S&P had fallen 2.7 percent, while the Nasdaq had lost 3 percent in that time.
View the complete August 14 article by Sylvan Lane on The Hill website here.