U.S. stocks tumbled, while Treasuries gained with the yen as the Federal Reserve’s warning that the global economic outlook was uncertain rippled through markets. The Standard & Poor’s 500 Index slipped with European stocks, while gold gained after Fed Chair Janet Yellen sounded caution over slowing growth in China. German 10-year bund yields tumbled the most since July on speculation the euro-area central bank may boost stimulus. Emerging markets rallied on prospects for rates staying lower for longer, and the dollar fell. While Yellen said recent developments “may restrain economic activity somewhat,” she added that the implications “have not fundamentally altered” the Fed’s outlook for the economy. Traders in the federal fund futures market cut the chances of a December rate rise to below 50 percent, though most policy makers still expect a rate increase this year. “There’s some concern that the Fed sees something we’re not seeing in the data,” said Eric Green, director of research and senior managing partner at Penn Capital, which oversees $4 billion in Philadelphia. “The U.S. economic data has been generally strong. There is some concern that the Fed thinks they’re not strong enough or the Fed thinks that the international, particularly the China situation, is much worse than we can see.” Futures traders are pricing in a 17 percent probability the central bank increases the target range in October, a 44 percent chance by the December meeting and a 52 percent likelihood by January. Stocks The S&P 500 retreated 0.9 percent at 9:31 a.m. in New York. The gauge ended lower yesterday by 0.4 percent, erasing a gain of as much as 1.3 percent after Yellen indicated that global developments overshadowed signs of strength in America. The expiration of some futures and options on stocks and indexes, known as quadruple witching, may add to market volatility today. Automakers and banks led declines in Europe, with the Stoxx Europe 600 Index dropping 2.1 percent to erase its gain for the week. The volume of shares changing hands was 26 percent greater than the 30-day average. The London Stock Exchange is investigating a 1.1 percent plunge in the FTSE 100 Index that was immediately retraced. A spokesman said that no trades have been canceled.
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