Belfast Telegraph

UK Website Of The Year

US stocks hit by oil prices drop and Brexit fears

Published 10/06/2016

Stocks fell on Wall Street after a drop in oil prices and amid fears that Britain will leave the EU (AP)
Stocks fell on Wall Street after a drop in oil prices and amid fears that Britain will leave the EU (AP)

US stocks skidded on Friday in a wave of selling that wiped out most of the market's gains from earlier this week.

A drop in oil prices took energy companies sharply lower. Investors were also troubled by a poll showing Britain may be more likely to leave the European Union.

Oil prices fell by the largest amount in two months, and banks slumped as bond yields fell for the second consecutive day, pulling interest rates lower.

Machinery, technology and consumer stocks also lost ground. It was the market's biggest loss in more than three weeks.

Eric Wiegand, senior portfolio manager for US Bank's Private Client Reserve, said investors are guessing at the outcome of the British referendum and the Federal Reserve's meeting next week, as well as the impending US presidential election.

"There's just not a good way to handicap the outcome just yet," he said.

The Dow Jones industrial average lost 119.85 points, or 0.7%, to 17,865.34. The Standard & Poor's 500 index fell 19.41 points, or 0.9%, to 2,096.07. The Nasdaq composite shed 64.07 points, or 1.3%, to 4,894.55.

US crude shed 1.49 dollars, or 2.9%, to 49.07 dollars a barrel in New York. Brent crude, the benchmark for international oil prices, fell 1.28 dollars, or 2.5%, to 50.56 dollars a barrel in London. Oil prices had reached 11-month highs in the last few days.

ConocoPhillips gave up 2.06 dollars, or 4.4%, to 44.51 dollars and oilfield services company Schlumberger shed 1.43 dollars, or 1.8%, to 78.53 dollars.

As they did on Thursday, banks fell along with bond yields. Lower bond yields drive down interest rates on mortgages and other kinds of loans, and that makes them less profitable for banks.

Citigroup sank 1.11 dollars, or 2.5%, to 43.90 dollars and JPMorgan Chase lost 91 cents, or 1.4%, to 63.84 dollars.

Stocks started the week with three days of gains and reached their highest levels in months, but finished back where they started. For the week the Dow was a bit higher, the Nasdaq lower, and the S&P 500 essentially unchanged.

That showed investors are cautiously optimistic, as the US economy is still growing and corporate profits are expected to pick up later in the year.

But they are also very sensitive to uncertainty or potential trouble, whether it is from slower global growth or Fed policy, or Britain's status in the European Union.

A poll in London's The Independent showed that 55% of British citizens want to leave the European Union. Some investors fear Britain's economy will be damaged if it votes to leave the EU, and that other nations might follow Britain's lead.

Consumer stocks also fell, with some of the sharpest losses going to big names. Netflix slid 3.34 dollars, or 3.4%, to 93.75 dollars and Amazon declined 9.74 dollars, or 1.3%, to 717.91 dollars.

Retailer Urban Outfitters slumped after it said sales at established stores are continuing to fall in the second quarter so far. Those sales are considered an important measure of retailer performance. The company's stock slid 1.61 dollars, or 5.8%, to 26.32 dollars.

Read More

From Belfast Telegraph