U.S. stocks fell sharply Wednesday, following a series of worrying data on global economic growth, and after the yield on the 10-year U.S. Treasury note fell below that of the 2-year note, marking an inversion of the main measure of the yield curve and flashing a recession warning signal.

More than 450 stocks in the S&P 500 index were lower, as the retreat threatens to reverse gains notched on Tuesday, after investors cheered news that the Trump administration would delay the imposition of some new tariffs on Chinese goods, from Sept. 1 to Dec. 15.

How are the major benchmarks faring?

The Dow Jones Industrial Average 

DJIA, -2.33%

 fell 513 points, or 2%, to 25,763, while the S&P 500 index 

SPX, -2.33%

 shed 58 points, or 2%, to 2,868. The Nasdaq Composite

COMP, -2.58%

 meanwhile, lost 180 points, or 2.3%, to 7,835.

On Tuesday, the Dow Jones Industrial Average rose  372.54 points, or 1.4%, to end at 26,279.91, for the biggest one-day gain in two months. The S&P 500 index  added 42.57 points, or 1.5%, to close at 2,926.32. The Nasdaq Composite Index rose 152.95 points, or 2%, to 8,016.36.

What’s driving the market?

Bank stocks led the decline as the inversion of the yield curve is seen making it harder for banks traditional business model to work when short term borrowing costs are higher than longer term lending rates.

Bank of America

BAC, -4.38%,

Citigroup

CITI, -4.08%

  and J.P. Morgan

JPM, -3.79%

  were all sharply lower.

The yield on the 10-year U.S. Treasury note

TMUBMUSD10Y, -7.09%

 fell below that of the 2-year U.S. Treasury note

TMUBMUSD02Y, -6.56%

 for the first time in more than a decade early Wednesday as investors digested weak economic data out of China and Germany.

The spread between 3-month Treasury bills and the 10-year Treasury note has been negative since March but the 2-year Treasury/10-year note spread went negative for the first time since 2007 early Wednesday.

Read: The U.S. Treasury 2-10-year yield curve inverted and that means stocks are on ‘borrowed time’

An inverted yield curve is widely seen as a recession indicator, as it signals that investors believe the economy will slow significantly or contract in the near future.

“Given prior inversions of other curves . . . the fact that the 2-year note and the 10-year note has now inverted isn’t ‘fake news,’ wrote Justin Walters, co-head of research and investments at Bespoke Investment Group, wrote in a Wednesday note to clients. “Inversions are not a good sign for the economic outlook, having preceded prior recessions with frightening regularity.”

The action in the bond market followed data showing that Chinese industrial production growth in the world’s second-largest economy slowed to 4.8% year-over-year, its lowest level since 2002, while retail sales growth came in at 7.6%, down from 9.8% the month prior and well below the 8.6% consensus, according to FactSet.

Data out of Germany showed its economy contracting by 0.1% in the second quarter of 2019, the first time since the third quarter of 2018, with weakness in the global manufacturing sector and uncertainty over Britain’s planned exit from the European Union pointed to as reasons for the slowdown in Europe’s largest economy.

“On a morning laden with bad economic news, signs of an accelerating slowdown of China’s economy are not what global market participants wanted to hear,” Carl Weinberg, chief international economist at High Frequency Economics, wrote in a research note. “In Euroland, where industrial output is crashing, things are worse.”

In company news, WeWork parent We Co. publicly filed for an initial public offering of common stock, but hasn’t provided details on the number of shares it will offer or the expected pricing. The company had confidentially filed for an IPO in April, when it was valued at about $47 billion, The Wall Street Journal reported at the time.

On the data front, U.S. import prices rose 0.2% in July, above the consensus expectation of 0.1% according to Econoday. Excluding fuel, import prices fell 0.1%. These data do not include the cost of U.S. tariffs.

Which stocks are in focus?

Shares of Macy’s Inc.

M, -15.70%

 tumbled Wednesday morning, after the department-store retailer reported second-quarter earnings that missed expectations and lowered its guidance.

Wayfair Inc.

W, -7.80%

 proposed a new $750 million debt offering after the close of trade Tuesday, after which the home-furnishings retailer’s stock fell. Shares were down 7.5% early Wednesday.

Shares of Canada Goose Holdings Inc.

GOOS, -10.09%

 fell, after the luxury apparel maker reported deeper losses during the fiscal first quarter, though it surpassed expectations for revenue growth.

Shares of Cisco Systems Inc.

CSCO, -2.86%

 could be in focus Wednesday, ahead of the company’s fiscal fourth-quarter earnings report, due to be released after the close.

How are other markets trading?

The yield 30-year U.S. Treasury bond

TMUBMUSD30Y, -5.77%

 was also under pressure, falling 10 basis points to 2.039%, near all-time lows.

In Europe, stocks were trading sharply lower, with the Stoxx Europe 600 index

SXXP, -1.80%

 down 1.8%.

In commodities markets, the price of oil

CLU19, -4.31%

 was down 3.2%, while the price of

GCQ19, +0.73%

 rose 0.7% to roughly $1,513 per ounce. The U.S. dollar

DXY, +0.07%

 , meanwhile, was trading flat.

Asian stocks closed higher overnight, with the China CSI 300

000300, +0.45%

 rising 0.5%, Japan’s Nikkei 225

NIK, +0.98%

 adding 1% and Hong Kong’s Hang Seng index

HSI, +0.08%

 edging 0.1% higher.

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2019-08-14