The Dow recorded its worst day of the year on Wednesday, plunging about 800 points, after a key recession indicator flashed in the bond market and economic data from Germany and China intensified slowdown fears.

Investors poured into the bond market, triggering a dire sign: The yield on the 10-year Treasury fell below the yield on the two-year.

That hasn't happened since 2007 and, historically, an inverted yield curve signals an economic slowdown is coming.

The Dow Jones Industrial Average lost 3.05% to finish at 25,479, while the Standard & Poor's 500 index dropped 86 points, or 2.93%, to end at around 2,841.

The tech-heavy Nasdaq composite plunged 242 points, or 3.02%, to 7,774.

Another downward driver in markets on Wednesday was news that Germany, Europe’s biggest economy, contracted 0.1% in the second quarter of the year from the previous three-month period as global trade conflicts combined with troubles in the auto industry.

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Figures overnight also showed how China is suffering from the trade conflict with the United States. Chinese factory output, retail spending and investment weakened in July, suggesting the world’s second-largest economy faces downward pressure on growth.

Factory output rose 4.8% over a year earlier, a marked decline from June’s 6.3%. Retail sales growth slowed to 7.6% from the previous month’s 9.8%. Investment in real estate and other fixed assets also weakened.

On Tuesday, stocks had one of their better days recently after the Office of the U.S. Trade Representative said it would delay the tariffs on some products, including popular consumer goods, until Dec. 15. A few other products were removed altogether, including certain types of fish and baby seats.

“The relief rally inspired by the Trump administration delaying tariffs on some Chinese imports was short lived," said Fiona Cincotta, senior market analyst at City Index. "Blink and you missed it."

Contributing: Associated Press