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

Reuters

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    * 2-year, 10-year Treasury yields invert for 1st time in 12
yrs
    * 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 U.S. 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 U.S.-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.  urn:newsml:reuters.com:*:nL8N25A1D1  urn:newsml:reuters.com:*:nL4N25A0U7
    "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.  urn:newsml:reuters.com:*:nL2N25A0JK
    Such a yield inversion is held by many as a traditional
harbinger of recession. 
    "When you're in an ultra-low interest rate environment as
we'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 market
participants 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, or
2.45%, to 2,854.54 and the Nasdaq Composite  .IXIC  dropped
216.34 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 largest
percentage loss.
    Interest rate-sensitive banks  .SPXBK  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  M.N  shares plunged 11.5% after the department
store missed quarterly profit estimates and cut full-year
earnings estimates.  urn:newsml:reuters.com:*:nL4N25A3HF
    Macy's peers Nordstrom Inc  JWN.N  and Kohls Corp  KSS.N 
slid 10.2% and 11.2%, respectively.
    A U.S. House of Representatives oversight panel called on
Mylan NV  MYL.O  and Teva Pharmaceutical Industries Ltd
 TEVA.TA  to turn over documents as part of a review into
generic 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 finish
line, with 454 of the companies in the S&P 500 having posted
results. Of those, 73.1% beat Street estimates, according to
Refinitiv 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 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)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))

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