US close: Stocks end firmly lower on Brexit worries
US stocks closed firmly in the red on Monday as investors continued to worry about the impact of Britain’s decision to leave the European Union.
The Dow Jones Industrial Average ended down 1.5%, the S&P 500 fell 1.8% and the Nasdaq slumped 2.4%.
Joshua Mahony, market analyst at IG, said: “What we really need is some form of decisive action, as financial markets seek reassurance that things will be OK. What we look likely to get is two months of political infighting, followed by another 20 months of uncertainty as the new leader somehow attempts to secure a deal which appeals to the many facets of the leave campaign. This will all take time and in the meanwhile, investors and businesses are left to ponder what the potential impact will be of this monumental decision.”
George Osborne said on Monday that the UK was ready to face the future “from a position of strength”, adding that there would be no immediate emergency Budget.
Looking to calm financial markets in his first public address since the referendum results, the Chancellor said in a statement: “Growth has been robust and employment is at a record high. Our economy is now about as strong as it could be to confront the challenge the country now faces."
After the result of the EU referendum, the Bank of England said it stood ready to provide £250bn of additional funds to support the UK’s banks.
In currency markets, the dollar was enjoying further gains on Monday as the pound slid to fresh 31-year lows.
Societe Generale strategist Kit Juckes said: “The extent of the uncertainty that now clouds the UK’s economic and political outlook is hard to exaggerate. The government is in limbo ahead of a Conservative Party leadership contest. The opposition is in chaos. The rest of the EU would like negotiations on the UK’s exit to begin but they have no-one to negotiate with.
“Uncertainty is negative for the UK economy, for investor confidence and obviously, for the pound. Sterling has now fallen by 9% against the US dollar since the eve of the UK referendum, and we look for an eventual move in GBP/USD to 1.20- 1.25.”
Banks suffered heavy losses; Bank of America tumbled over 12%, JPMorgan ended down 5% and Citigroup fell 4.5%.
On the upside, however, US-listed shares of Randgold Resources rallied as gold continued to make gains on its safe-haven appeal and following an upgrade by Goldman Sachs.
On the data front, figures from Markit showed activity in the US services sector was unchanged this month, missing economists’ expectations.
Markit’s flash US services purchasing managers’ index came in at 51.3, undershooting estimates of 51.9. A reading above 50 indicates expansion.
Markit’s chief economist Chris Williamson said: “The survey data indicate that any rebound in the economy from the weak first quarter was largely confined to April, and that growth has since faded again. The June PMIs, which provide the first insight into national business activity in the second quarter, suggest the underlying rate of growth in the economy is only a meagre 1%.”
Oil prices settled lower amid Brexit woes, with West Texas Intermediate down 2% at $46.70 a barrel and Brent crude 1.7% lower at $47.58.
S&P 500 - Risers
Kroger Co. (KR) $36.62 +4.21%
Dr Pepper Snapple Group Inc. (DPS) $95.85 +3.98%
Extra Space Storage (EXR) $90.31 +3.96%
Public Storage (PSA) $250.21 +3.68%
NextEra Energy Inc. (NEE) $127.88 +3.30%
Tyson Foods Inc. (TSN) $65.24 +2.63%
Edison International (EIX) $76.45 +2.49%
Eversource Energy (ES) $58.59 +2.39%
Amer Water Works (AWK) $81.71 +2.23%
Southern Co. (SO) $52.20 +1.97%
S&P 500 - Fallers
Western Digital Corp. (WDC) $42.17 -11.85%
Seagate Technology Plc (STX) $20.87 -9.89%
Invesco Ltd. (IVZ) $23.16 -9.43%
PVH Corp. (PVH) $84.91 -9.24%
Borg Warner Inc. (BWA) $27.69 -9.21%
Owens-Illinois Inc. (OI) $16.33 -9.08%
CBRE Group Inc (CBG) $24.88 -8.90%
Mosaic Company (MOS) $24.69 -8.25%
People's United Financial Inc. (PBCT) $13.84 -8.22%
United Continental Holdings Inc. (UAL) $37.75 -8.06%
Dow Jones I.A - Risers
Johnson & Johnson (JNJ) $116.55 +0.80%
Verizon Communications Inc. (VZ) $54.74 +0.57%
Dow Jones I.A - Fallers
American Express Co. (AXP) $57.67 -3.98%
JP Morgan Chase & Co. (JPM) $57.61 -3.34%
Boeing Co. (BA) $122.70 -3.02%
E.I. du Pont de Nemours and Co. (DD) $64.08 -2.91%
Microsoft Corp. (MSFT) $48.43 -2.81%
Intel Corp. (INTC) $30.72 -2.63%
McDonald's Corp. (MCD) $116.30 -2.63%
Visa Inc. (V) $73.34 -2.28%
Caterpillar Inc. (CAT) $71.38 -2.26%
International Business Machines Corp. (IBM) $143.50 -2.11%
Nasdaq 100 - Risers
Tesla Motors Inc (TSLA) $198.55 +2.80%
Whole Foods Market Inc. (WFM) $31.25 +1.59%
Comcast Corp. (CMCSA) $62.46 +1.31%
Tractor Supply Company (TSCO) $92.90 +1.19%
Monster Beverage Corp (MNST) $154.81 +0.89%
Dollar Tree Inc (DLTR) $92.56 +0.73%
Ross Stores Inc. (ROST) $54.75 +0.61%
T-Mobile Us, Inc. (TMUS) $41.20 +0.24%
O'Reilly Automotive Inc. (ORLY) $267.73 +0.03%
Nasdaq 100 - Fallers
Western Digital Corp. (WDC) $42.17 -11.85%
Seagate Technology Plc (STX) $20.87 -9.89%
Endo International Plc (ENDP) $13.69 -7.81%
Micron Technology Inc. (MU) $12.24 -7.34%
NetApp Inc. (NTAP) $22.97 -7.08%
Liberty Global plc Series C (LBTYK) $26.71 -6.80%
American Airlines Group (AAL) $25.27 -6.58%
Autodesk Inc. (ADSK) $50.54 -6.48%
Liberty Global plc Series A (LBTYA) $26.99 -6.28%
Nxp Semiconductors Nv (NXPI) $75.04 -6.28%