Stocks fall, rate cuts may not help

Markets mostly fell on Tuesday.

The S&P 500 fell 1.2 percent and the STOXX Europe 600 tumbled 1.3 percent. Ealier in Asia, the Nikkei 225 rose 0.6 percent.

US stocks fell after the Institute for Supply Management reported that its manufacturing index fell from 49.1 in July to 47.8 in August, its worst reading since June 2009.

Following the report, the fed funds futures market is now pricing in a 65 percent chance of a quarter-point rate cut on 30 October compared with 40 percent a day ago.

However, UBS thinks that rate cuts will not save the stock market this time.

“The Fed-easing rallies of the 1990s were made possible by a strong inverse correlation between interest rates and P/Es. This relationship no longer exists today,” UBS equity strategist Francois Trahan said in a note on Tuesday.