US STOCKS-Recession fears hit Wall Street after grim China, German data

Wall Street was set to open sharply lower on Wednesday, as poor economic data from China and Germany put the focus back on the impact of a bruising Sino-U.S. trade war which is pushing some major economies towards the brink of recession. The outlook for Germany's export-reliant economy was also grim and Chinese industrial output growth cooled to a more than 17-year low, adding to headwinds for U.S. multinationals that rely on global demand.

The U.S. bond market showed red flags, with two-year Treasury yields rising above those for 10-year paper for the first time since 2007, pointing to the risk of recession. Wall Street's main indexes surged more than 1.5% on Tuesday after Washington delayed the introduction of tariffs on some Chinese consumer goods.

"It's almost as if global investors either don't buy the tariff delay as a sign of real progress in the U.S.-China trade war or have been too consumed by further evidence of global economic weakness to care," BMO Capital Markets strategist Stephen Gallo said. At 8:28 a.m. ET, Dow e-minis were down 361 points, or 1.37%. S&P 500 e-minis were down 39.25 points, or 1.34% and Nasdaq 100 e-minis were down 119 points, or 1.54%.

Banks were among the losers in trading before the bell, with Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs, Wells Fargo & Co and Morgan Stanley down between 2.3% and 3.1%. Shares of Apple Inc were down 2.3% after boosting markets a day earlier with a 4% rise.

Chipmakers were also trading lower, with Micron Technology Inc, Broadcom Inc and Nvidia Corp down more than 2%. Macy's Inc tumbled 12.9% after the department store operator cut its full-year profit forecast as it discounted heavily to clear excess spring season inventory.

Rivals Target Corp and Nordstrom Inc slipped between 3.8% and 4.5%.