In a continuation of a volatile week on Wall Street, stocks plummeted Wednesday, with the Dow falling over 650 points after the bond market flashed global recession fears.

The Dow dropped 646.74 points, or 2.46%, while the S&P fell 2.5% and the Nasdaq declined 2.3%, as of 12:08 p.m. ET.

The yield on the benchmark 10-year Treasury note hit 1.622%, which is below the 1.634% of a 2-year. For the first time since before the Great Recession, yields on short-term bonds surpassed those of long-term bonds, suggesting stronger worries about a recession. 

“The equity market is on borrowed time after the yield curve inverts,” Bank of America Merrill Lynch strategists wrote in a Tuesday note.

"The 3-month Treasury bill to 10-year note curve has been inverted for weeks now and with the inversion of the 2-year to 10-year curve. The stars are aligned across the curve that the economy is headed for a big fall," Chris Rupkey, chief financial economist at MUFG Union Bank, told the Washington Post. "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."

Bank stocks took a strong hit in early afternoon trading, as Bank of America (BAC) fell 4.47% and Citigroup (C) fell 5.07%, while J.P. Morgan (JPM) also dropped 3.91%.

"Investors who believe an inverted yield curve is a bad omen may turn to defensive plays like consumer staples, health care, and utilities," said Mike Loewengart, vice president of investment strategy at E*Trade, according to "Regardless of where the yield curve and market may take us, it's critical for investors to stay the course and focus on maintaining a diversified portfolio aligned to their long-term goals."

The dip on Wednesday comes after stocks on Tuesday closed sharply higher amid reports that the Trump administration would not impose tariffs on some Chinese imports from Sept. 1.