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Stocks - Wall Street Tumbles After Brief Yield Curve Inversion – Wall Street slumped on Wednesday after the yield curve on the 2-year and 10-year Treasury note briefly inverted for the first time since 2007, increasing fears of a recession.

The 2-year yield rose as much as two basis points above the 10-year at one point before retreating. By 9:55 AM ET (1355 GMT), it was back at 1.59%, one basis point below the 10-year, as weak economic data out of China and Europe triggered a broad rally in safe-haven assets.

Figures released earlier showed industrial output growth in China fell to a 17-year low in July. They were followed by data showing that Germany suffered a 0.1% decline in GDP in the second quarter, dragging eurozone growth down to a mere 0.2%. Analysts at Deutsche Bank (DE:DBKGn) said they expect a second straight quarter of contraction for Germany in the current quarter, the technical definition of a recession.

The Dow declined 361 points or 1.4% by 9:40 AM ET (13:40 GMT), while the S&P 500 fell 41 points or 1.4% and the Nasdaq composite was down 121 points or 1.5%.

"Historically the U.S. curve was always thought of as a recession signal and it remains to see if that's still the case," said Tim Graf, chief macro strategist at State Street Global Advisors. "The world certainly seems a less safe place."

," said Tim Graf, chief macro strategist at State Street (NYSE:STT) Global Advisors.

Financial stocks were under pressure, with Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), JP Morgan Chase (NYSE:JPM) and Citigroup (NYSE:C) all falling 3%.

Canada Goose fell 4.5% after the market close, as its losses in the second-quarter widened. Tilray slumped 14.8% and Luckin Coffee declined 15.6% after both companies posted stronger-than-expected losses.

Apple (NASDAQ:AAPL) declined 2.3%, while (NASDAQ:AMZN) was down 1.9% and Macy’s (NYSE:M) tumbled 16% after the company said heavy markdowns during the spring season weighed on profits.

Other companies that are often seen as rough proxies for the economy also suffered. Fedex inched down 1.7%, while Walmart (NYSE:WMT) slipped 0.6% and Caterpillar (NYSE:CAT) fell 2.4%.

In commodities, crude oil slumped 3.4% to $55.11 a barrel while the U.S. dollar index, which measures the greenback against a basket of six major currencies, was flat at 97.588. Gold futures gained 0.7% to $1,525.35 a troy ounce.

-Reuters contributed to this report

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