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Federal Reserve daily records only go back to 1962, and those reflect a previous record of 1.70 percent, set May 17.

“There’s just a massive flight to safe-haven assets today,” O’Donnell said.

He characterized the rush into U.S. bonds by citing a well-known, unsavory analogy made by Richard Fisher, the head of the Federal Reserve’s Dallas bank: “The U.S. is the prettiest horse in the glue factory.”

Yields on German government bonds, also seen as safe, turned lower.

Concern about Europe lurked around every corner: The European Commission said consumer confidence fell sharply across the region last month. Spaniards withdrew money from their banks, spreading fear about that nation’s ability to go on without bailouts. Spain’s main stock index closed down 2.6 percent.

An opinion poll in Greece showed that the far-left Syriza party is gaining support ahead of key elections June 17. Syriza opposes the system of bailouts and sharp budget cuts that have kept Greece afloat but also gutted its economy.

If the party wins, Greece may be forced to exit the euro currency. The shock waves could reach nations that have received bailouts, like Portugal, and those that might need them, like Italy.

Until the Greek elections next month, things will be too uncertain for the market to sustain a meaningful rally, said David Kelly, chief market strategist at J.P. Morgan Funds.

If the bailouts continue and European governments start spending to spur growth, Kelly expects the market eventually to rise. If Syriza wins and Greece is expelled from the euro, he sees stormy waters for months to come.

Amid the tumult, Europe’s executive branch called on the 17 countries that use the currency to create a “banking union” that can centrally oversee and, if needed, bail out national banks.

If Europe’s financial crisis plunges it into a deep recession, global economic growth will likely falter, reducing demand for commodities and machines that power growth.

Fearing that outcome, traders pushed the stocks of heavy equipment maker Caterpillar and aluminum company Alcoa to among the biggest declines among the 30 companies that make up the Dow.

The euro fell as low as $1.2360, the lowest since the summer of 2010. Benchmark stock indexes closed down 2.2 percent in France, 1.8 percent in Italy and Germany.

When banks and big investors get frightened, they sell stocks or bonds and park the money in the safest government debt markets. They buy Japanese yen, German bonds and especially U.S. Treasurys.

It’s no longer about turning a profit, said O’Donnell of RBS. That’s why German government two-year notes are paying zero percent: People are simply handing their money over for safekeeping.

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