While the chairman of the Federal Reserve told Congress that a recession can be averted, Wall Street sent Washington a different message: it’s already here.

The Dow Jones industrial average plunged 306 points, capping a 14.2 per cent slide from its all-time high in October. After 12 days of trading, the broader Standard & Poor’s 500-stock index is off to its worst January on record. And the Russell 2000 index, which tracks small companies, sank into a bear market. “All the momentum is pointing down,” said Bruce Bittles, chief investment strategist at Robert W Baird. “There’s no way to sugarcoat that.”

Corrections of this magnitude have coincided with recessions in the past, though not always. In 1990, a steep sell-off presaged a downturn, while a similar drop in 1998 came and went with no apparent effect on the broader economy.

But the stock market isn’t the only part of the financial world that is pointing to trouble. The Baltic Dry index, a shipping index that is considered a leading indicator on the health of the global economy, has plummeted. And investors have fled high-risk corporate bonds, which can default in times of trouble.

And a troubling trend is emerging in the S&P 500 Shares of energy and materials companies, the top performers last year, have fallen to the bottom of the pack. Investors appear to be betting that those sectors will be hurt by a coming downturn, and are looking to get out. Indeed, losses accelerated throughout the day, with a flurry of selling in the final hour of trading. Trading on the NYSE reached its highest level since the summer.

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