Stock indices bounced around as 10-year Treasury hit lowest yield since October 2016 and yuan slid past 7 per dollar.

United States stock indices tumbled early on Wednesday, as the latest signals from the bond market pointed to a heightened risk of a recession.

The Dow Jones Industrial Average sunk over 500 points in morning trading, before clawing back some ground to register a loss of 350 points just after noon. But by the end of the day, it was only down 22 points.

qatar airways

The S&P 500 was down significantly before recovering by the time trading finished, while the tech-heavy Nasdaq Composite Index performed slightly better.

Investors were heeding warning signs from the bond market that the US economy could be heading for troubled times. The premium on three-month bill rates – well above 10-year note yields – was at its most elevated levels since March 2007. This so-called inversion of the yield curve – measuring the difference between the two maturities – has preceded every US recession in the past 50 years.

Traders raised bets that the Federal Reserve will respond by cutting key borrowing costs three more times by the year’s end, with markets fully pricing in a rate cut in September.

Expectations of more rate cuts from the Fed come on the heels of monetary easing from central banks in New Zealand, India and Thailand on Wednesday.

Investors and policymakers are concerned over how ongoing US-China trade tensions could impact global growth, after President Donald Trump last week threatened to slap 10 percent levies on the rest of $300bn in imports from China.

“[Markets] are moving lower on global growth concerns,” said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp. “And coming into question is the broader fundamental strength of economies around the world.”

Global markets fell under pressure at the start of the week over investor concerns that the US-China trade war could escalate into a currency war, after China’s central bank allowed the yuan to slip below the key seven-per-dollar mark. That milestone prompted the Trump administration to label China a “currency manipulator.”

On Wednesday, China’s offshore yuan fell past that level again, after a partial recovery on Tuesday that sparked a one percent gain in the three main Wall Street indexes.

With the second-quarter earnings season winding down, about 73 percent of the 426 S&P 500 companies that have reported results so far have topped earnings estimates.

Walt Disney Co dropped 4.94 percent on the day after its quarterly earnings missed analysts’ forecasts as the company invested heavily in its streaming platform and began folding in assets purchased from 21st Century Fox.

Meanwhile, CVS Health Corp rose 7.45 percent after the drugstore chain posted profit above estimates, boosted by strong sales in the Aetna health insurance business it acquired last year.