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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 12yrs

* Gloomy economic data from Germany, China

* 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 onWednesday as investors fled equities for safe-haven assets,seeking shelter amid gathering signs that a recession could beon the horizon.

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

Elsewhere, ominous indicators suggested a faltering globaleconomy, hobbled by the intensifying U.S.-China trade war,Brexit jitters and geopolitical concerns. Germany reported acontraction in second-quarter GDP, and China's industrial growthin July hit a 17-year low. urn:newsml:reuters.com:*:nL8N25A1D1urn:newsml:reuters.com:*:nL4N25A0U7

"Every central bank around the world is trying to prop upeconomies and every politician around the world is trying todestroy economies," said Oliver Pursche, chief market strategistat Bruderman Asset Management in New York. "What's happening inHong Kong, what's happening with Brexit and the trade war, it'sall a mess."

Yields for 2-year and 10-year Treasuries inverted for thefirst time since June 2007, months before the onset of the greatrecession, which crippled markets for years. urn:newsml:reuters.com:*:nL2N25A0JK

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

"When you're in an ultra-low interest rate environment aswe've been, you'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 XAU= rebounded, rising over 1% as marketparticipants fled stocks for the precious metal. urn:newsml:reuters.com:*:nL4N25A40A

The Dow Jones Industrial Average .DJI fell 653.29 points,or 2.49%, to 25,626.62, the S&P 500 .SPX lost 71.78 points, or2.45%, to 2,854.54 and the Nasdaq Composite .IXIC dropped216.34 points, or 2.7%, to 7,800.02.

All of the 11 major sectors in the S&P 500 were in the red,with energy .SPNY and financial .SPSY suffering the largestpercentage loss.

Interest rate-sensitive banks .SPXBK fell 4.1%.

Tariff-vulnerable chipmakers were also firmly in negativeterritory, with the Philadelphia SE Semiconductor index down3.0%.

Macy's Inc'sM.N shares plunged 11.5% after the departmentstore missed quarterly profit estimates and cut full-yearearnings estimates. urn:newsml:reuters.com:*:nL4N25A3HF

Macy's peers Nordstrom IncJWN.N and Kohls CorpKSS.N slid 10.2% and 11.2%, respectively.

A U.S. House of Representatives oversight panel called onMylan NV MYL.O and Teva Pharmaceutical Industries LtdTEVA.TA to turn over documents as part of a review intogeneric drug price increases. urn:newsml:reuters.com:*:nL2N25A07E

Mylan shares fell 7.9% while Teva dipped 9.2%.

The second-quarter earnings season approaches the finishline, with 454 of the companies in the S&P 500 having postedresults. Of those, 73.1% beat Street estimates, according toRefinitiv data.

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

Declining issues outnumbered advancing ones on the NYSE by a4.35-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) ((stephen.culp@thomsonreuters.com; 646-223-6076;))






This article appears in: Politics , Stocks , World Markets , US Markets



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