Dow futures fall 50 points at open as sell-off triggered by bond recession signal drags on

Stocks are set for another down day after the Dow Jones Industrial Average suffered its worst day of the year amid a recession signal from the bond market.

Dow futures opened down about 70 points Wednesday evening, while futures on the S&P 500 and the Nasdaq Composite are also lower. The stock market took a huge hit in the previous session with the Dow plunging 800 points in its fourth-largest point drop ever to a two-month low. The Dow's 3% drop was the worst this year. The S&P 500 also fell nearly 3%.

The massive sell-off was triggered by a bond market phenomenon on Wednesday where the yield on the benchmark 10-year Treasury note briefly broke below the 2-year rate. The inversion of this key part of the yield curve has been a reliable indicator of economic recessions. As of Wednesday evening, the curve was no longer inverted.

"The 2-10 inversion is sending a massively negative signal that stocks are having a difficult time ignoring," Adam Crisafulli, a J.P. Morgan managing director, said in a note on Wednesday.

The weak economic data around the world also fueled concerns that the global slowdown could tip the U.S. economy into a recession. Growth of China's industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years. Germany also saw a negative GDP print, while the growth in euro zone also slowed at a faster pace than expected.

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