The Dow Jones Industrial Average on Wednesday suffered its worst percentage drop of 2019, plunging 800.49 points, or 3.05%. The decline comes after government-bond markets reinforced warnings to the markets about a potential recession and amid escalating trade tensions.

The yield on the benchmark 10-year Treasury Note briefly broke below the 2-year rate for the first time since 2007, dropping to 1.623%, below the 2-year yield at 1.634%. 

This inverted yield curve has historically signaled a looming recession.

"The yield curves are all crying timber that a recession is almost a reality and investors are tripping over themselves to get out of the way as economic recession hurts corporate earnings and stocks can drop as much as 20 percent," Chris Rupkey, chief financial economist at MUFG Union Bank, said Wednesday.

The S&P dropped 85.72 points, or 2.9%, to 2,840.60, while the Nasdaq fell 242.42, or 3%, to 7,773.94.

Financial stocks were hit hard. JP Morgan Chase (JPM) dropped 4.15%, while Goldman Sachs (GS) dropped 4.19%. Bank of America (BAC) and Citigroup (C) fell 4.69% and 5.28%, respectively.

The markets' decline wasn't only felt in the U.S. After reports of the German economy shrinking in the second quarter, the Stoxx Europe 600 fell 1.7%, while the German DAX dropped 2.2%.