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* 2-year, 10-year Treasury yields invert for 1st time in 12 yrs
* Gloomy economic data from Germany, China
* Macy's slides after FY outlook cut; weighs on rivals
* Rate-sensitive banks slump
* Indexes drop: Dow 2.49%, S&P 2.45%, Nasdaq 2.70% (Updates to late afternoon, changes dateline, byline)
By Stephen Culp
NEW YORK, Aug 14 (Reuters) - Wall Street stumbled on Wednesday as investors fled equities for safe-haven assets, seeking shelter amid gathering signs that a recession could be on the horizon.
All three major U.S. indexes were sharply lower as short- and long-dated Treasury yields inverted for the first time in 12 years, a potential signal of imminent recession.
Elsewhere, ominous indicators suggested a faltering global economy, hobbled by the intensifying U.S.-China trade war, Brexit jitters and geopolitical concerns. Germany reported a contraction in second-quarter GDP, and China's industrial growth in July hit a 17-year low.
"Every central bank around the world is trying to prop up economies and every politician around the world is trying to destroy economies," said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. "What's happening in Hong Kong, what's happening with Brexit and the trade war, it's all a mess."
Yields for 2-year and 10-year Treasuries inverted for the first time since June 2007, months before the onset of the great recession, which crippled markets for years.
Such a yield inversion is held by many as a traditional harbinger of recession.
"When you're in an ultra-low interest rate environment as we've been, you've got to ask if the old metrics still apply," Pursche added. "My guess is yes."
The CBOE volatility index, a gauge of investor anxiety, jumped 4.26 points to 21.78.
Spot gold prices rebounded, rising over 1% as market participants fled stocks for the precious metal.
The Dow Jones Industrial Average fell 653.29 points, or 2.49%, to 25,626.62, the S&P 500 lost 71.78 points, or 2.45%, to 2,854.54 and the Nasdaq Composite dropped 216.34 points, or 2.7%, to 7,800.02.
All of the 11 major sectors in the S&P 500 were in the red, with energy and financial suffering the largest percentage loss.
Interest rate-sensitive banks fell 4.1%.
Tariff-vulnerable chipmakers were also firmly in negative territory, with the Philadelphia SE Semiconductor index down 3.0%.
Macy's Inc's shares plunged 11.5% after the department store missed quarterly profit estimates and cut full-year earnings estimates.
Macy's peers Nordstrom Inc and Kohls Corp slid 10.2% and 11.2%, respectively.
A U.S. House of Representatives oversight panel called on Mylan NV and Teva Pharmaceutical Industries Ltd to turn over documents as part of a review into generic drug price increases.
Mylan shares fell 7.9% while Teva dipped 9.2%.
The second-quarter earnings season approaches the finish line, with 454 of the companies in the S&P 500 having posted results. Of those, 73.1% beat Street estimates, according to Refinitiv data.
Analysts see S&P 500 second-quarter earnings growth of 2.8% year-on-year, per Refinitiv.
Declining issues outnumbered advancing ones on the NYSE by a 4.35-to-1 ratio; on Nasdaq, a 5.19-to-1 ratio favored decliners.
The S&P 500 posted eight new 52-week highs and 51 new lows; the Nasdaq Composite recorded 19 new highs and 242 new lows. (Reporting by Stephen Culp; Editing by Lisa Shumaker)