U.S. stocks sank the most in a month as Standard & Poor’s Ratings Service cut the nation’s long-term credit outlook to negative. Ten-year Treasuries erased earlier gains and the cost to protect corporate bonds from default climbed to the highest level this month. The S&P 500 declined 1.5 percent to 1,300.24 at 9:58 a.m. in New York, its biggest drop since March 16. The yield on the 10-year Treasury note climbed three basis points to 3.44 percent after declining four basis points earlier. The dollar was up 1.1 percent at $1.4275 per euro. Gold for June delivery advanced 0.5 percent to $1,493.50 an ounce. S&P reduced the outlook for the long-term U.S. debt rating to negative from stable, while affirming its AAA long-term and A-1+ short-term sovereign credit ratings. S&P said that more than two years after the beginning of the recent crisis, U.S. policymakers have not agreed on a strategy to reverse recent fiscal deterioration or address longer-term fiscal pressures. “Obviously, the negative outlook for the U.S. is not good news,” said Peter Jankovskis, who helps manage about $2.7 billion at Oakbrook Investments in Lisle, Illinois. “We’ve had an environment of low interest rates. People might be asking for a premium. We might not be able to lend at the extremely low rates as we’ve seen so far. The market had a huge run up. That also puts some pressure on a day like this one.” The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, added 2.2 basis point to a mid- price of 96.2 basis points as of 9:30 a.m. in New York, according to index administrator Markit Group Ltd. 2011 Gain The S&P 500 has risen 4.9 percent in 2011 through April 15 amid government stimulus measures and higher-than-estimated corporate earnings. The index, which has gained as much as 99 percent since March 2009, this month rose to near the highest closing level for the rally. The S&P 500 advanced to 1,335.54 on April 6, or 7.47 points below the high on Feb. 18. Global stocks fell and the euro weakened for a second day against the dollar earlier on speculation Greece will be unable to avoid a default, even after officials said debt restructuring isn’t being discussed. Greece’s two-year yield surged as much as 129 basis points to a euro-era high of 19.79 percent, while Portuguese debt-insurance costs climbed to a record. China increased banks’ reserve requirements to lock up cash and cool inflation, and central bank Governor Zhou Xiaochuan said monetary tightening will continue for “some time.” Reserve ratios will rise a half point from April 21, the People’s Bank of China said on its website yesterday, pushing the requirement to a record 20.5 percent for the biggest lenders. The move came less than two weeks after an interest- rate increase. Zhou sees no “absolute” limit on how high reserve requirements can go, he said April 16. To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

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