Stocks, bond yields fall

It looks like the Fed move on Tuesday provided little lasting lift to stock markets. From Bloomberg on Wednesday:

Stocks plunged, sending the MSCI World Index to its biggest drop since June, and Treasuries led a rally in government bonds on concern that the U.S. economic recovery is faltering. The dollar surged the most in 19 months against the euro.

The MSCI measure slid 2.8 percent at 4:50 p.m. New York time, the biggest decline since June 29. The Standard & Poor’s 500 Index sank 2.8 percent, and the Dow Jones Industrial Average retreated 265.42 points, or 2.5 percent, to 10,378.83. The two- year Treasury yield fell as much as 3 basis points to a record low of 0.4892 percent. Gilts extended gains after the Bank of England cut its forecast for growth. The dollar gained up to 2.4 percent, the most since Jan. 6, 2009, to $1.2864 per euro.

Economic data released on Wednesday added to the slowdown concerns.

In the US, exports stalled in June. Bloomberg reports:

The U.S. trade deficit unexpectedly widened in June by a record $7.9 billion as imports rose and shipments abroad declined.

The $49.9 billion gap was the biggest since October 2008 and followed a $42 billion shortfall in May, Commerce Department figures showed today in Washington...

Exports decreased to $150.5 billion in June from $152.4 billion, reflecting fewer shipments of semiconductors, computers and steelmaking materials. Imports rose in June to $200.3 billion from $194.4 billion, led by telecommunications equipment, automobiles and record consumer goods.

The Chinese stock market, however, was among the few that actually rose on Wednesday despite the economy also showing signs of slowing. From Bloomberg:

China’s stocks rose, with the benchmark index rebounding from the biggest decline in six weeks, as a slowdown in industrial output growth and new lending spurred speculation the government will ease monetary policy...

The Shanghai Composite Index rose 12.22, or 0.5 percent, to close at 2,607.5. The gauge swung between gains and losses more than 10 times amid concern that rising consumer prices will limit policy makers’ ability to lift lending and property curbs. The CSI 300 Index advanced 0.6 percent to 2,850.21...

Industrial production rose 13.4 percent from a year earlier, the statistics bureau said in Beijing today. Output slowed as the government cracked down on real-estate speculation, curbed credit and closed factories to meet energy-efficiency targets.

Chinese banks extended 532.8 billion yuan ($78.7 billion) of new local-currency loans last month, the central bank said on its website today. That compared with the median forecast of 600 billion yuan in a Bloomberg News survey of 23 economists. In June, the amount was 603.4 billion yuan.

M2, the broadest measure of money supply, grew 17.6 percent from a year earlier, the data showed. The economists’ median forecast was 18.5 percent. In June, the gain was 18.5 percent...

Inflation quickened to 3.3 percent, the fastest in 21 months, boosted by a low year-earlier base for comparison and rising food costs, according to the statistics bureau.

Urban fixed-asset investment rose 24.9 percent in the first seven months of 2010 from a year earlier, the statistics bureau said today. That compared with economists’ median estimate of 25.3 percent and a 25.5 percent gain for January-through-June.

Retail sales grew an annual 17.9 percent in July, compared with 18.3 percent in the previous month, the bureau said. Economists had estimated an 18.5 percent increase.