Stocks, bond yields fall sharply as worries about growth spread

NEW YORK» Wall Street was roiled Friday by new signs that global economic growth is slowing. The jitters triggered a sell-off in stocks and sent bond yields sharply lower, flashing a possible recession warning.

The wave of selling knocked 460 points off the Dow Jones industrial average and gave the benchmark S&P 500 index its worst day since Jan. 3. The Russell 2000 index of smaller company stocks fell more than the rest of the market as traders dumped riskier assets.

Worried investors shifted money into bonds, which sent yields much lower. The yield on the 10-year Treasury dropped to 2.43 percent from 2.54 percent late Thursday, a big move.

The slide in bond yields hurt bank stocks, which, along with technology companies, accounted for much of the broad decline in stocks. The utilities sector was the only one to eke out a gain.

The market’s skid runs counter to what has been a strong start to the year on Wall Street as stocks rebounded from a steep slide at the end of 2018. The bull market for U.S. stocks recently marked its 10th anniversary and is now the longest ever.

The fear that gripped investors Friday was fueled by a steadily dimming outlook for the global economy. China, the world’s second-largest economy after the United States, is weakening. And other economies that depend heavily on purchases in China have suffered as a result.

Factory production in the euro currency alliance has fallen at its steepest rate in about six years. In Germany, Europe’s largest economy, a survey of purchasing manager manufacturers posted its sharpest production drop in nearly six years.

Orders to German factories also have tumbled.

In another worrying sign, the yield on the 10-year Treasury note fell Friday below the yield on the three-month Treasury bill. When that kind of “inversion” in bond yields occurs, economists fear that it can signal a recession within the coming year.

The S&P 500 index dropped 54.17 points, or 1.9 percent, to 2,800.71. The Dow gave up 460.19 points, or 1.8 percent, to 25,502.32.

The Nasdaq composite, which is heavily weighted with technology stocks, slid 196.29 points, or 2.5 percent, to 7,642.67. The Russell 2000 lost 56.49 points, or 3.6 percent, to 1,505.92.