A range of global factors are hitting markets as fears of a recession grow.
World stocks sold off sharply for a second consecutive session Monday on persistent concerns over global economic growth, while benchmark 10-year U.S. Treasury yields hit year-long lows.
Following a steep sell-off in stocks Friday, investors were busy digesting weak U.S. factory data that prompted an inversion of the U.S. Treasury yield curve, generally seen as an indicator of economic recession.
“There have been lots of signs that central banks in particular think that the global economy is slowing down,” Chris Gaffney, president of world markets at TIAA Bank, said in a statement.
On Wall Street, the Dow Jones Industrial Average dropped by 66.95 points, or 0.26 percent, to 25,435.37; the S&P 500 shed 8.77 points, or 0.31 percent, to 2,791.94; and the Nasdaq Composite fell by 40.64 points, or 0.53 percent, to 7,602.02.
The pan-European STOXX 600 index lost 0.64 percent.
In some positive news, a survey showed German business morale was improving after six consecutive drops, with the results supporting European shares and German bond yields.
On Friday, the spread between yields on three-month Treasury bills and 10-year notes fell below zero for the first time since 2007.
Meanwhile, investors were evaluating last week’s controversial decision by the U.S. Federal Reserve, in which the central bank abandoned projections for any interest rate hikes this year.
“We’re examining yield curve relationships in an environment where the Fed still has enormous control over the long end of the curve, given how much they own on their balance sheet, and we’re dealing with a very accommodative global policy regime as well,” Tom Simons, a money market economist at Jefferies in New York, told Reuters.
The dollar index, which measures the greenback against a basket of currencies, fell 0.2 percent, with the euro up 0.11 percent to $1.1324.
Oil prices also fell amid fears of a sharp economic slowdown due to OPEC’s production cuts and U.S. sanctions on Iran and Venezuela.
U.S. crude fell 1.27 percent to $58.29 per barrel and Brent was last at $66.59, down 0.66 percent on the day.