Transcript for Dow closes down 800 points as roller coaster in markets continues
This is an ABC news special. Now reports. TV news. And good afternoon we come on here at this hour because we are monitoring what has been a volatile day on Wall Street the Dow set to close imminently it's been down more than 700 points for much of the afternoon you can see it's down. 764. Points right there right now investors have been rattled all day amid new signs the possible recession ahead. If that's one key Bellwether on Wall Street the ten year treasury note the yield on that today that ten year note dropped below the two year he'll that's very rare it's known as. In version yield curve and regardless of what is called. That has proceeded recessions in many times before of course a could be wrong this time that all of this comes as the president has escalated to trade war with China. The president tweeting today we are winning. Big time against China he goes on to say China is not our problem and said if the Fed. Through the closing bell wait there down 798. Points as we approach 4 o'clock here now more than 800 points this is a significant. Day on Wall Street in fact the largest drop so far this year had been last week 767. Points but there you have it. Closing down 800 points today let's get right to our chief economics correspondent Rebecca Jarvis you heard the president say it is not China. It's the Fed we know the Fed chair dropped rates for the first time what in a decade just couple of weeks ago. And the Fed has power but they don't necessarily control all the statement ultimately what we've been seeing here are week after week rattled markets. In light of trade in light of this Bellwether that you just mentioned. It has Ben a bell weather ahead for stocks previously and for recessions in 2007. That is the last time you sobbing yield curve as you mentioned. Going bird and and Wall Street is always looking for signals always looking for information this is one piece of information. As is the fact that trade with China tariffs have Ben and uncertainty hanging over the market as of the fact that. Around the world right now you've seen economy is that a pure to be pulling back. And when you look at this full picture it you now all of a sudden have economists saying. Recession that our work ahead in the next six to eighteen months that's a very big issue for Wall Street right now. And a big issue as we know for the White House as well would this. A presidential race now in in full swing and you mentioned those economies overseas Germany and China both slowing down among others. I want to bring in Terry Moran is live in Washington interior for the president say. A China's not the problem but there have been. Economic impacts from this escalating trade war in the president himself saying what we've seen in Hong Kong the last 48 hours is not helping. That's right some serious headwinds for this economy has Rebecca has just said and a lot of it stems from the president's own choice to gold or trade war. With China and there is a whiff of panic a little bit around the White House right now. As that they have dome good economy heads into these headwinds. You are seeing. The impact of the trade war on the terrorists not just in agriculture but in consumer goods rising prices for Americans so much so. That the president blank yesterday he postponed the last round of tariffs who's gonna slap on the Chinese goods the imports of consumer goods electronics primarily. Hoping he isn't commerce secretary Wilbur Ross said. To go easy on consumers this Christmas season so you see the president who has so much at stake here is reelection essentially. Is already kind of blaming the Fed and try to dial down his own trade war as this economy stumbled. Solitary make an important point there because even before today before this significant Bellwether indicating recession could be possible. And in the near term Elizabeth Warren one of the democratic candidates had already come out in recent days saying. That a US downturn is coming that the warning lights are flashing rare for a candidate to do that the Terry this points out. That this is already an issue and will no doubt become an increasing one in the days and weeks ahead. And especially in a campaign year the president is the one who gets the credit when the economy is good and gets the blame when the economy is bad. President trump is acutely aware of this. But I'll tell you he doesn't have a lot of ammunition on the fiscal side their couple ways of addressing a downturn you can spend more cut taxes or get the Fed to lower rates he's already hammering the Fed on that. Pressuring them strong but there's not a lot of appetite in congress right now the deficit is ballooning taxes have already been cut and there's this not not much room to spend right now. Terry thank you it's that inversion yield curve I mentioned earlier that's the Bellwether want to get back to Rebecca because for folks at home that really doesn't matter much other than. It's been an indicator before that a recession could becoming what matters really at home. Are the prices you pay I'm very common goods we've already seen some of those prices affected we've seen the farmers in the middle of this country affected. And as Terry mentioned the president blinked in the last 24 hours when it came to those tariffs other who's going to impose in the coming weeks saying he'll wait on common goods on toys appliances. Until look mid December saying he didn't want to affect Christmas shopping. Right I mean for the people around this country the biggest thing is what you're gonna pay and do you have a job. And the issue is the ripple affect these tariffs that is the big question. Hanging over the US economy right now because they are being delayed now to December 15. And that some things are worn it costs more money very likely but the other part of that is what companies do with those increase costs. If there are now paying more money for something to come over the border what do they do about the jobs the people corps employee to sell those items here in the United States. And that's the ripple a fact that Wall Street is thinking about right now as it looks to the future next year and beyond. Are pretty continue to follow this as you can see in your screen there the Dow closing down more than 800 points today that's the steepest drop yet this year. Last week we saw a drop of 767. Points or today obviously. As a steeper drop than that and that's based on the fears about the US trade war the escalating trade were with China and of course that and version curb today which is a common Bellwether of the proceeds a recessions here in this country passed before course a could be wrong this time. But it is a key indicator so we'll continue to fall this and how little fact American families. That's coming up on world news tonight I'm David door here in New York thanks for watching effects.
This transcript has been automatically generated and may not be 100% accurate.