Stock Market Updates: "Dow Drops 300 Points As Stocks Extend Losses; Materials Off 3%"

by Evelyn Cheng

10:57 AM EST ”U.S. stocks traded sharply lower Monday, extending Friday’s decline after the surprise U.K. vote to leave the European Union. The Dow Jones industrial average fell more than 300 points in mid-morning trade. The S&P 500 traded more than 2 percent lower, below the psychologically key 2,000 level. Both indexes fell below their 200-day moving averages in intraday trade for the first time since mid-March. 3M, IBM, and Goldman Sachs had the greatest negative impact on the Dow as nearly all constituents declined. Materials declined 3 percent and financials traded more than 2.5 percent lower to lead S&P sector decliners. Investors remained defensive, with telecom company Verizon the only positive Dow component and utilities and telecoms the only advancing S&P sectors.

The factors behind the decline are “not anything different” from Friday, said Ryan Larson, head of equity trading, U.S., at RBC Global Asset Management (U.S.). “Just a continuation of the concerns regarding the outcome. Unfortunately (it’s) not a one-day event, a two-day event, but presents significant uncertainties not only for the U.K. but how the world will be impacted going forward.” “The market was suggesting broader Europe had more to lose than the U.K.,” he said. “Today it seems more across the board.”

European stocks traded sharply lower Monday, with the German DAX off about 2.5 percent. Asian stocks closed mostly higher, with the Shanghai composite up nearly 1.5 percent and the Nikkei 225 rising about 2.4 percent. Overnight, Japanese Prime Minister Shinzo Abe said at an emergency meeting between the government and the Bank of Japan that he has instructed Finance Minister Taro Aso to watch currency markets “ever more closely” and take steps if necessary, following the historic Brexit vote, Reuters said. The People’s Bank of China set the yuan’s midpoint fix against the dollar at 6.6375, its weakest level since late 2010.

The U.S. dollar index extended recent gains to trade about 1 percent higher, with the euro around $1.10 and the yen around 101.6 yen versus the greenback as of 10:15 a.m. ET. Pound sterling edged below Friday’s lows to hold near levels not seen in about 30 years, last trading near $1.32. 

In economic news Monday, the Markit flash services PMI for June came in unchanged from the prior month at 51.3.

Treasury yields were lower, with the 2-year yield around 0.58 percent and the 10-year yield near 1.47 percent as of 10:16 a.m. ET. Oil traded more than 2 percent lower to below $47 a barrel. The Dow transports declined more than 2.5 percent in morning trade. The Nasdaq composite traded 2 percent lower.

“I think the market’s trying to adapt to the uncertainty and volatility,” said Marc Chaikin, CEO of Chaikin Analytics. “It’s clearly a shock to the system… but the ultimate outcome is by no means clear,” he said. Stocks plunged Friday, with the Dow Jones industrial average and S&P 500 erasing year-to-date gains after the surprise U.K. vote to leave the European Union. Global markets lost a record $2.08 trillion on Friday, according to Howard Silverblatt of S&P Dow Jones Indices. U.S. markets accounted for $830 billion of that loss, he said.

In morning trade, the Dow Jones industrial average declined 209 points, or 1.2 percent, to 17,192, with JPMorgan Chase leading all constituents lower.”

- http://www.cnbc.com/2016/06/27/us-markets.html

If Europe goes, and it will, guess who’s next? This is deadly serious, folks…

I strongly encourage you to read, or re-read, this post from yesterday: