Sept. 22 (Bloomberg) -- Stocks and commodities tumbled, Treasury 30-year yields dropped to a record and the Dollar Index climbed to a seven-month high amid concern central banks are running out of tools to prevent another recession.
The MSCI All-Country World Index sank 3.9 percent at 10:31 a.m. in New York, extending declines from its May peak to more than 22 percent, and emerging-market stocks plunged the most in three years. The Standard & Poor’s 500 Index lost 2.4 percent as the U.K.’s FTSE 100 Index, France’s CAC-40 Index and Germany’s DAX slid at least 4.2 percent. Thirty-year Treasury yields fell as low as 2.8177 percent, with German 30-year yields also reaching an all-time low. The Dollar Index rose 1.3 percent and commodities erased their gains for the year.
The Federal Reserve said yesterday it saw “significant downside risks” in the U.S. economy and it will replace $400 billion of short-term debt with longer-term Treasuries to spur growth as the recovery falters two years after the biggest slump since the Great Depression. China’s manufacturing may shrink for a third month in September, a preliminary index of purchasing managers from HSBC Holdings Plc and Markit Economics showed today, and American jobless claims topped forecasts.
“The storyline is that global growth is decelerating,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $774 billion. “Financial stresses are rising and policymakers are finding few viable options to stabilize the real economy.”
The S&P 500 extended its four-day slump to almost 6.5 percent. The index lost 2.9 percent yesterday after the Fed’s statement and as Moody’s Investors Service cut its long-term credit ratings on Bank of America Corp. and Wells Fargo & Co., saying U.S. support has become less likely if lenders get into financial trouble. Citigroup Inc.’s short-term rating also was downgraded by Moody’s.
Raw-material and energy producers lost more than 4 percent and industrial companies slid 3.2 percent to lead losses among all 10 industry groups in the S&P 500, with Alcoa Inc., Chevron Corp. and Boeing Co. losing at least 4 percent. FedEx Corp., operator of the world’s biggest cargo airline, tumbled 7.4 percent to a two-year low after cutting its full-year profit forecast amid declining demand in the U.S. and Asia.
The S&P 500 Financials Index slumped 2.2 percent, extending this week’s decline to almost 10 percent and sinking to the lowest level since July 2009.