The selling, which erased some of the market’s gains from Monday’s strong rally, came as long-term bond yields once again fell below short-term ones, a rare phenomenon that has heralded previous recessions.
Smaller-company stocks bore the brunt of the selling, which sent the Russell 2000 index down 19.96 points, or 1.4%, to 1,456.04. When the yield curve inverted earlier this month for the first time since 2007, it led to a broad market sell-off. Financial-sector stocks fell the most as bond prices surged, which pulled yields sharply lower. Declining yields mean lower profits for banks because they pull down interest rates on mortgage and other loans. JPMorgan Chase shares fell 1.1%. Citigroup shares dropped 1.7%.
Technically, the Dow has put in a flag pattern (on the daily bar), another drop of 2000 is imminent.
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