Wall Street closed Wednesday with heavy losses and the Dow Jones Industrial Average, the benchmark indicator, dropped 3.05 percent due to the decline in bond prices, which caused a brief inversion of the yield curve for 10-year and 2-year Treasury Bonds, a circumstance some analysts view as a harbinger of recession.
At the close of trading on the New York Stock Exchange, the Dow was down significantly - 800.49 points - coming to rest, for today at least, at 25,479.42, its largest percentage drop this year.
The S&P 500 index fell 2.93 percent, or 85.72 points, to 2,840.60 and the Nasdaq composite index, in which large tech companies are included, lost 3.02 percent, or 242.42 points, closing at 7,773.94.
The financial sector was one of the hardest hit for the day, losing 3.57 percent, with big banks like Citigroup down 5.28 percent, Bank of America 4.69 percent, JPMorgan down 4.17 percent, Goldman Sachs down 4.20 percent and Wells Fargo down 4.33 percent.
The energy sector was also a big loser on the day, down 4.12 percent, a situation linked to the decline in West Texas Intermediate Crude prices, futures contracts of which lost almost $3, ultimately closing at $55.23 and pressured by the unexpected increase in US crude reserves and poor economic data out of Europe and China.
There was great volatility on the New York trading floor and all the indexes were down sharply at midday as recession fears rattled the market, including signs of a slowdown in the economies of Germany and China.
The 10-year T-bond, the country's benchmark bond, briefly dropped below the 2-year bond during the morning, something that had not occurred since June 2007.
The inversion in the yield curve for publicly traded short- and long-term bonds sparked unease in the market, since this phenomenon has preceded several past recessions and many consider it to be a sign that the economy is fragile and perhaps about to take a dive.
President Donald Trump weighed in on the situation on Twitter, saying: "CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!"
Trump was referring to the Federal Reserve, headed by Chairman Jay Powell.
At the close of trading, the 10-year T-bond yield stood at 1.581 percent and the 2-year bond's yield was at 1.579 percent, while the 30-year bond's yield, which has fallen to historic lows, was at 2.019 percent.
Meanwhile, China released figures showing that its industrial production expanded by 4.8 percent in July, the slowest growth in this indicator since February 2002, providing evidence of weakness in domestic demand in the Asian giant, which is presently mired in an ongoing trade war with the US.
That is not the only country being affected by the trade war, with Germany - Europe's largest economy - reporting that its economy contracted by 0.1 percent in the second quarter pulled down by a drop in exports and a decline in industrial production, its two main pillars.
Among the 30 blue chip stock comprising the Dow Jones index, chemical firm Dow lost 5.91 percent, Walgreens was down 5.01 percent, Exxon Mobil lost 4.03 percent, Cisco 4 percent, Chevron 3.80 percent and Boeing 3.74 percent.
In other markets, gold - historically considered a safe haven in times of economic turmoil - rose to $1,524.80 per ounce and the euro strengthened to 1.1134 to the dollar.