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Stocks are falling sharply after the bond market threw up another warning flag on the economy.

The yield on the 10-year Treasury briefly dropped below the two-year Treasury’s yield Wednesday morning for the first time since 2007. That’s an ominous signal that has correctly predicted many past recessions.

Investors dumped stocks, more than erasing gains from a rally the day before.

Retailers came under especially heavy selling pressure after Macy’s issued a dismal earnings report.

The Dow Jones Industrial Average fell 616 points, or 2.3%, to 25,659.

The S&P 500 lost 68 points, or 2.3%, to 2,857. The Nasdaq lost 218 points, or 2.7%, 7,800.

U.S. government bond prices continued to soar as investors sought safety. The yield on the 10-year Treasury note sank to 1.59% from 1.68% Tuesday.