World stocks tumbled and bonds rallied today as a resurgence in credit worries roiled markets and sent investors into safe-haven investments one day after the Federal Reserve cut interest rates to calm subprime-related concerns.
Weaker financial stocks led a steep drop on Wall Street that encouraged investors to back out of riskier assets, pushing up the yen against the dollar and lifting US Treasury debt prices.
European shares suffered their largest one-day percentage drop in eight weeks, hit by declines in banks.
Citigroup shares fell as much as 9 per cent after a CIBC World Markets analyst downgraded the largest US bank to "sector underperformer." The analyst said Citigroup would be forced to sell assets, raise capital or cut its dividend to improve its capital ratios.
Adding to the gloom, Exxon Mobil reported profits that fell short of analysts' expectations. Exxon shares slid 2.5 per cent on the NYSE.
The Dow Jones industrial average was down 225.41 points, or 1.62 percent, at 13,704.60. The Standard & Poor's 500 Index was down 25.35 points, or 1.64 per cent, at 1,524.03.