The steepest year-end slump in global stocks since 2000 left equities with the cheapest valuations in more than 30 years as inflation accelerated and the American economy showed signs of slowing. AT&T Inc. and other telephone company stocks became the least expensive group in the MSCI World Index compared with the cash they produced. Shares of ABB Ltd. and competing engineering companies failed to keep pace with earnings growth. A majority of Japan’s companies trade at less than half their net assets as profits and wages contract in the world’s second-largest economy.

“Equities on a valuation basis should be worth more,” the chief investment officer of global equities at BlackRock Inc. in Plainsboro, N.J., who oversees $1.3 trillion, Robert Doll, said. “The devil’s advocate argument says, ‘But wait a minute, that’s based on some notion of earnings and how do you know the earnings are going to be there?’ That’s going to make it tougher for markets.”

Stocks fell to the lowest last month relative to bonds since the 1970s according to the so-called Fed model, which was cited by the former chairman of the Federal Reserve, Alan Greenspan, a decade ago. Equities yield 4.17 percentage points more in projected earnings than 10-year government bonds paid in interest at the end of 2007, according to an analysis of 29 countries by New Yorkbased Lehman Brothers Holdings Inc.

The gap is now the widest since September 1974, when adjusted for volatility, the data show. The last time the spread was wider, equities outperformed debt by 24 percentage points in the next 12 months, according to Lehman.