The Dow slumped 350 points, or 1.4%, on Wednesday afternoon. The index was briefly down more than 400 points, sinking below 25,000. The Dow hasn't closed below that level in four months.
The renewed market turbulence reflects deepening concerns about the fallout from the collapse in trade talks between the Trump administration and China. Investors fear that tariffs — and China's retaliation — will badly slow the global economy and ding corporate profits.
"Trade talks have stalled. That's putting fear into people and getting them to move out of stocks," said Ryan Nauman, market strategist at Informa Financial Intelligence's Zephyr.
Cash has rushed to the safety of government bond yields, sending 10-year Treasury bond yields plunging to the lowest levels since late 2017.
Crucially, the yield curve — the gap between short-term and long-term bond yields — has inverted. In the past, that has been a reliable predictor of upcoming recessions.
"The curve getting inverted could become a self-fulfilling prophesy," said Michael Block, market strategist at Third Seven Advisors. "It's freaking the hell out of everyone."
The Dow has declined five weeks in a row, its longest weekly slump since 2011.
Energy stocks have also been crushed, driven lower by tumbling oil prices. US oil dropped 3% on Wednesday amid concerns about rising inventories and how the trade war will impact demand.
The Dow has lost about 6% in May, leaving it on track for its first losing month of 2019. The Dow hasn't had a losing May since 2012.
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