Dow falls 150 points as yields dip amid economic fears

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From Fred Imbert: Stocks fell on Wednesday, tracking bond yields, as worries over a possible economic slowdown lingered.

The Dow Jones Industrial Average traded 66 points lower and briefly fell more than 200 points. The S&P 500 and Nasdaq Composite declined 0.4 percent and 0.6 percent, respectively.

Earlier in the day, the major averages traded higher on better-than-expected trade data. The U.S. trade deficit fell to $51.15 billion in January, much more than was expected and could give a boost to this quarter’s GDP.

Health care, utilities and tech were the worst-performing sectors, falling more than half a percent.  Abiomed and Advanced Micro Devices were among the worst-performing stocks in the S&P 500, sliding more than 3.5 percent each.

The benchmark 10-year rate  traded at 2.365 percent and hit its lowest level since late 2017. Investors are keeping an eye on rates after the 10-year fell below the 3-month rate last week for the first time since 2007. It is a development that investors call an inverted yield curve and is seen as an early indicator of a recession.

The U.S. Treasury yield curve has inverted before each recession in the past 50 years and has only offered a false signal just once in that time, according to data from Reuters.

“All eyes are going to be on the Treasury market,” said Michael Reynolds, investment strategy officer at Glenmede. “We are seeing a rising probability of recession in recognition of these rising risks, but we’re not blowing off the top just yet.”

Yields fell on Wednesday after Stephen Moore, who is expected to be nominated to the Federal Reserve Board of Governors, called for the central bank to cut rates by half a percentage point. Moore made his remarks in an interview with The New York Times, noting he is not a “dove” or a “sycophant” for President Donald Trump.

Investors have been piling into Treasurys amid the release of weaker-than-expected economic data. The disappointing data have stoked fears that economic growth may be slowing down.

Chinese industrial profit suffered their biggest drop since 2011 in the first two months of the year, falling 14 percent year to date. Data released Tuesday showed consumer confidence slipped for the fourth time in five months.

Wall Street’s main indexes registered solid gains in the previous session, but finished below their session highs in a reflection of the underlying concerns about the economic outlook.

“We need global growth to stabilize to help propel stocks higher from here,” Tom Essaye, founder of The Sevens Report, said in a note. “The currency and bond markets continue to flash large and bright ‘caution’ signs on this market, and until bond markets start ‘acting’ better, I think it’ll be hard for stocks to sustainably rally.”

Shares of WellCare Health Plans surged more than 9 percent after announcing it would sell itself to Centene for $15.27 billion in a cash-and-stock deal. Centene shares, meanwhile, dropped 7 percent.

–CNBC’s Sam Meredith contributed to this report.

The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $255.87 per share on Wednesday afternoon, down $0.59 (-0.23%). Year-to-date, DIA has gained 4.29%, versus a 5.16% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

This article is brought to you courtesy of CNBC.