Stocks extended declines into a fourth consecutive session Friday, while global stocks fell to the lowest levels in two years, as investors retreated from risk markets amid hawkish central bank rate signaling and slumping global growth.
Stocks were also hit by the spillover impact of Britain's first budget under new Prime Minister Liz Truss, which includes an extra $80 billion in borrowing to pay for tax cuts and energy prices caps in the world's fifth-largest economy.
Benchmark 5-year Government Gilts, the equivalent of a Treasury bond, suffered their biggest single-day decline since 1991 while the pound slumped more than 3.5% to a fresh 37-year low of 1.0896 against the dollar.
The Federal Reserve's 75 basis point rate hike earlier this week, the third in succession, was echoed by both moves and rhetoric from central banks around the world this week, lifting benchmark borrowing costs and paring global stocks.
Further jumbo rate hikes are on the cards, as well, with the CME Group's FedWatch indicating a 77.1% chance of another 75 basis point increase in November, up from 0% in late August.
The hawkishness has, for the most part, only benefited the U.S. dollar, which scaled to another 20-year peak against its global peers despite the first currency market intervention from the Bank of Japan -- aimed at bolstering the beaten-down yen -- since 1998.
Economic activity data from Europe underscored the impact of both rate hikes and hawkish signaling, with Germany's powerhouse manufacturing sector indicating a deep September contraction and the region-wide composite PMI reading holding below the 50 point mark that indicates growth for the second consecutive month.
In the U.S., where the Atlanta Fed's GDPNow forecasting tool suggests third-quarter growth of just 0.3%, the bond market continues to flash recession warnings, with benchmark 2-year note yields rising to 4.165% in New York trading, placing them around 50 basis points north of 10-year notes.
U.S. Treasury bond yields, in fact, have risen more than 110 basis points since August 1, Bank of America noted in its weekly 'Flow Show' report, helping put global bond markets on pace for their biggest annual declines in more than seven decades.
Goldman Sachs, meanwhile, cut its full-year target for the S&P 500 to 3,600 as investors add to concerns over a so-called 'hard landing' for the world's biggest economy.
The U.S. dollar index rose another 1.28% in New York trading to hit a fresh two-decade high of 112.776, pushing both euro to 0.9709. The index was at 112.96 at last check.
Stocks in Europe were back in the red Friday, as well, with the Stoxx 600 marked 2.28% by the close of trading in Frankfurt and the FTSE 100 down 2% in London as finance minister Kwasi Kwarteng delivered the first budget statement to lawmakers in Parliament.
That followed a 1.65% decline for the MSCI ex-Japan index in Asia as stocks in China remain stuck at four-month lows on renewed growth concerns in the world's second-largest economy.
In the U.S., the S&P 500 ended down 1.72%, while the Dow Jones Industrial Average fell 486 points, or 1.62%, to 29,590, finishing below the 30,000 mark for the first time since the mid-June lows and marked a new low for the year. The tech-focused Nasdaq lost 1.80%.
Costco (COST) shares were a notable mover, falling 4.3% after the bulk retailer posted stronger-than-expected fourth quarter earnings but saw profit margins narrow amid stubbornly high input costs.
DocuSign (DOCU) shares ended down nearly 3% amid the tech stock selloff, after the online signature vending group named former Google ad executive Allan Thygesen as group CEO.
Boeing (BA) fell 5.4% after the planemaker, as well as former CEO Dennis Muilenburg, agreed to pay just over $200 million in fines to the U.S. Securities and Exchange Commission for misleading investors in the aftermath of two fatal crashes of its 737 MAX aircraft.
Apple (AAPL), meanwhile, looks to have stolen a march on its big tech rivals in the bidding war for rights to the NFL Sunday Ticker package of programing after reaching at deal late Thursday to sponsor the Super Bowl halftime show. Shares ended down 1.51%.
