(CNBC) — Stocks plunged on Wednesday, giving back Tuesday’s solid gains, after the U.S. bond market flashed a troubling signal about the U.S. economy.
The Dow Jones Industrial Average dropped about 600 points or 2.3%, while the S&P 500 fell 2.1% and Nasdaq Composite declined 2.3%. The Cboe Volatility Index, aka Wall Street’s fear gauge, jumped to a high of 22 on Wednesday.
The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.