Dow tumbles 500 points on a scary sign from the bond market

(CNN) – The Dow and the broader US stock market are tumbling once again Wednesday as Wall Street investors fear the US-China trade war will inflict broad damage on the global economy.

After a one-day respite, panic has reignited over trade. Investors are pulling money out of stocks and buying up US bonds and gold as safe havens.

The 10-year US government bond yield tumbled near a three-year low of 1.6181%. Bonds and yields move in opposite directions.

Gold was also a big winner Wednesday. Gold futures edged toward $1,500 an ounce for the first time since 2013. Gold rose 1.8% and is up nearly 17% this year.

The Dow fell more than 500 points, or 2%, while the S&P 500 was down 1.7%. The Nasdaq Composite dropped 1.5%. All three indexes erased their Tuesday gains.

Global central banks’ rate cuts are helping fuel bond buying too. Overnight, both the Reserve Bank of New Zealand and the Reserve Bank of India delivered steeper-than-expected rate cuts.

The US Federal Reserve cut rates last month for the first time in a decade. That helped precipitate the decline in long-term bond yields, although yields had been trending lower for some time.

That’s a worrying sign: The yield curve, which plots the interest rates across the maturities of debt, is currently inverted. Shorter-term debt is paying higher rates than longer-term bonds, as investors remain fearful of a US recession. An inversion of the yield curve has preceded every recession.

Yields could continue to drop if President DonaldTrump gets his way. Trump lashed out at the Federal Reserve on Twitter, saying the central bank was “too proud to admit their mistake of acting too fast and tightening too much.” Trump called for “bigger and faster” rate cuts and said the yield curve “is at too

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