U.S. stocks traded sharply lower on Thursday as fears for economic slowdown continued.

At midday, the Dow erased 551.02 points, or 2.20 percent, to 24,476.05. The S&P 500 decreased 50.54 points, or 1.87 percent, to 2649.52. The Nasdaq Composite Index fell 69.88 points, or 0.98 percent, to 7,088.55.

The Cboe Volatility index, widely considered the best fear gauge in the stock market, rose 18.03 percent to 24.48 in morning session on Thursday.

The U.S. three-year treasury note yield surpassed its five-year note on Monday. The inverted yield curve caught investors' attention because historical statistics showed that when short-term yields trade above longer-term rates a recession could follow.

Anxiety around a potential yield curve inversion sent the yield on the benchmark 10-year Treasury note and the 30-year Treasury bond to 2.865 percent and 3.129 percent respectively. Bond yields move inversely to prices.

On the data front, the U.S. trade deficit increased 1.7 percent to 55.5 billion U.S. Dollars in October, hitting a 10-year high, as soybean exports continued to decline and imports of consumer goods increased largely.

The non-manufacturing index rose to 60.7 in November as services sectors continued to expand, according to data released Thursday by the Institute for Supply Management.