Crossmark Global Investments’ Victoria Fernandez on concerns about what the yield curve inversion signals about the economic outlook, the Federal Reserve and the state of the markets.
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Investors are also concerned about weakening economic data in Europe and Asia.
Dow Industrial futures are pointing to anearly 400 point drop or 1.5 percent. S&P 500 futures are pointing to a fall of 1.4 percent when the market opens. Nasdaq futures are lower by more than 1.6 percent.
The yield curve is blaring a recession warning. The spread between the U.S. 2-year and 10-year yields on Wednesday turned negative for the first time since 2007.
Such a development has occurred ahead of each and every U.S. recession of the last 50 years, sometimes leading by as much as 24 months.
The German economy shrank by 0.1 percent in the second quarter from the previous three-month period as global trade conflicts and troubles in the auto industry weighed on Europe’s largest economy.
The major European markets are trading lower.
Chinese factory output, retail spending and investment weakened in July, suggesting the world’s second-largest economy faces downward pressure on growth.
Factory output rose 4.8 percent over a year earlier, a marked decline from June’s 6.3 percent. Retail sales growth slowed to 7.6 percent from the previous month’s 9.8 percent.
U.S. stocks are indicating a pulling back from Tuesday’s rally which was spurred by the Office of the U.S. Trade Representative saying it would delay the tariffs on some Chinese products, including popular consumer goods, until Dec. 15.
A few other products were removed altogether, including certain types of fish and baby seats.
Macy’s reported a 48 percent drop in quarterly profit and cut its forecast for full-year adjusted earnings on Wednesday. Shares dropped 13 percent in the premarket.
On the economic front, the Labor Department said on Wednesday import prices increased 0.2 percent last month as a rebound in the cost of petroleum products offset declines in prices for capital goods and motor vehicles.
Japan’s Nikkei added nearly 1 percent, Hong Kong’s Hang Seng inched up less than 0.1 percent and the Shanghai Composite edged up 0.4 percent.
The Associated Press contributed to this article
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