Stocks capped a wobbly day on Wall Street with broad losses Tuesday as anxious investors shifted money to U.S. government bonds, gold and other traditional safe-haven assets.
The selling, which erased some of the market's gains from a strong rally a day earlier, came as long-term bond yields once again fell below short-term ones, a rare phenomenon that has correctly predicted previous recessions.
Worries that the costly trade war between the U.S. and China will drag the U.S. economy into a recession have increased demand for U.S. government bonds. On Tuesday, that pulled the yield in the 10-year Treasury below that of the two-year Treasury.
This so-called inversion of the U.S. yield curve has accurately predicted the past five recessions.
"You have a symptom in the inversion, but really the cause of that symptom is the tariffs and the trade war causing a global slowdown," said Dan Heckman, national investment consultant at U.S. Bank Wealth Management.
The S&P 500 fell 9.22 points, or 0.3%, to 2,869.16.
The benchmark index has fallen for the past four weeks in a row.
The Dow Jones Industrial Average dropped 120.93 points, or 0.5%, to 25,777.90. The Nasdaq slid 26.79 points, or 0.3%, to 7,826.95.
Smaller company stocks bore the brunt of the selling, which sent the Russell 2000 index down 19.96 points, or 1.4%, to 1,456.04.
Major indexes in Europe closed mostly higher.
The major U.S. indexes are on track for losses of 3% or more in August in what has been a volatile month for the market.