New York (CNN Business) The Dow fell 460 points Friday after a US recession indicator blinked red and a report on German manufacturing raised concerns about Europe's most important economy.

The index shed 1.8%, while the S&P 500 closed down 1.9%. The Nasdaq plunged 2.5%. It was the worst performance for all three major indexes since January 3.

The yield on 3-month Treasuries rose above the rate on 10-year Treasuries for the first time since 2007 — a shift that scared Wall Street. Investors have piled back into stocks after a sell-off in late 2018.

The flattening yield curve, or the difference between short- and long-term rates, has worried investors for months. A narrowing spread is typically seen as sign that long-term economic confidence is dwindling. For decades, an inversion has been a reliable predictor of a future recession.

Friday's flip added to pressure on the Dow that was building before US markets opened.

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