U.S. stocks extended losses into a second day on Friday following another drop in oil prices and rising worries about the global economy ahead of Britain’s referendum on whether to stay in the European Union.
Ahead of Britain’s referendum on June 23, a poll showed those in favor of Britain exiting the EU, or “Brexit,” were well ahead of those who favor remaining. The British pound fell against the dollar.
“The inability of the S&P to even hold key resistance tells you the market is not ready to break out to new record highs,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
“The global economy is weak and it can’t handle any major shocks. If Brexit occurs, that’s a major shock.”
The S&P energy index was down 2.2 percent, leading sector losses.
At 3:14 p.m., the Dow Jones industrial average was down 165.18 points, or 0.92 percent, to 17,820.01, the S&P 500 lost 25.36 points, or 1.2 percent, to 2,090.12 and the Nasdaq Composite dropped 77.64 points, or 1.57 percent, to 4,880.98.
Investors around the world swapped equities for less risky assets such as U.S. Treasury bonds and the Japanese yen. Yields on government bonds fell globally, to record lows in some cases, while the S&P financial index was down 1.5 percent.
Jeffrey Gundlach, chief executive of DoubleLine Capital, said Friday investors are dropping risky assets because of falling global GDP expectations, fueled by China’s slowing growth and the intensifying U.S. presidential race.
Some stock investors are betting on a return of the volatility that marked the first two months of the year. The bounce-back in commodity prices that fueled much of the 13.3-percent rally in the Standard & Poor’s 500 index since its February lows is leveling off.
The CME Volatility index, Wall Street’s fear gauge, jumped 17.6 percent.
Among Wall Street’s few bright spots on Friday was Intel , up 0.4 percent. Bloomberg reported the chipmaker would replace Qualcomm as an Apple supplier for some iPhones. Qualcomm was down 2.4 percent.
Copyright Reuters, 2016
Courtesy : BRecorder