Stocks and commodities tumbled, Treasury 30-year yields dropped to a record and the Dollar Index climbed to a seven-month high as the Federal Reserve signaled “significant downside risks” in the U.S. economy.

The MSCI All-Country World Index retreated 2.5 percent at 6:15 a.m. in New York, extending declines from its May peak to more than 20 percent. Standard & Poor’s 500 Index futures slid 1.8 percent. Thirty-year Treasury yields fell to 2.9103 percent, with German 30-year yields also dropping to an all-time low. The Dollar Index advanced as much as 1.5 percent, while the euro weakened 0.7 percent against the U.S. currency. Commodities erased their gains for the year.

The Fed said yesterday it will replace $400 billion of short-term debt with longer-term Treasuries to spur growth as the recovery falters two years after the biggest slump since the Great Depression. China’s manufacturing may shrink for a third month in September, a preliminary index of purchasing managers from HSBC Holdings Plc and Markit Economics showed today. The biggest risk to the euro area is a run on southern European banks, said Kenneth Rogoff, a former chief economist at the International Monetary Fund, Handelsblatt reported. For more visit: Bloomberg.com

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