Anxiety over a possible exit of the U.K. from EU weigh on momentum
U.S. stocks closed lower on Friday, 10 June 2016 with only blue chips holding onto slight gains for the week, as anxiety over a possible exit of the U.K. from the European Union and a drop in oil prices weighed on markets. In addition, a drop in oil prices, spurred a global selloff.
The Dow Jones Industrial Average fell 119.85 points, or 0.7%, to close at 17,865.34, for a weekly gain of 0.3%. The S&P 500 declined 19.41 points, or 0.9%, to finish at 2,096.07, for a loss of 0.2% on the week. The Nasdaq Composite Index dropped 64.07 points, or 1.3%, to close at 4,894.55, for a weekly loss of 1%.
Financials, consumer discretionary and health-care stocks led the losses this week, while energy shares were hit on Friday.
Most of its 30 blue-chip companies ended in negative territory. Goldman Sachs and Boeing were the top decliners on the index.
Oil contributed to the move lower as the U.S. crude benchmark tumbled 3%, to settle at $49.07. The slide in crude was triggered by a rising dollar, with investors looking ahead to next week's meeting of Federal Reserve policy makers. Expectations for an interest-rate hike have been dialed back following a lackluster May jobs report and dovish comments by Federal Reserve Chairwoman Janet Yellen, but investors are still wary of a possible tightening later in the summer.
Market sentiment in Europe has been dour due to fears that a U.K. referendum, set for 23 June, will result in Britain exiting the European Union. these worries have dragged European stock markets lower and has trickled over into the U.S., with equities there trading lower on Friday. Declines in the stock market have boosted the haven appeal of gold.
The greenback, was up 0.7% on Friday, adding to an advance that has seen the dollar gauge push 0.7% higher over the week. A stronger dollar makes assets pegged to the currency, like gold, less attractive to buyers purchasing with other monetary units. The dollar had been weaker as the odds of a rate increase by the Federal Reserve at its two-day policy meeting next week and in July have dimmed.
Negative rates throughout parts of Europe and the commencement of an additional quantitative-easing measures by the European Central Bank on Thursday, has resulted in sovereign-bond yields, which move in the opposite direction of prices, to record lows. That environment is likely to support appetite for precious metals.
Friday's economic data included the preliminary reading of the Michigan Sentiment Index for June and the Treasury Budget for May. The preliminary University of Michigan Consumer Sentiment report for June checked in at 94.3 (consensus 94.0), down slightly from the final reading of 94.7 for May and down from the 96.1 reading seen in June 2015. Separately, the Treasury Budget for May showed a deficit of $52.5 billion versus a deficit of $84.1 billion in May 2015.
Bullion prices settled higher on Friday, 10 June 2016. Gold prices ended higher to notch a second-straight weekly gain, as weakness in global equities helped to boost the metal's haven appeal. A higher finish for the dollar on the week, kept a cap on any gains, however.
August gold tacked on $3.20, or 0.3%, to settle at $1,275.90 an ounce, finishing at the highest level in more than three weeks. For the week, prices gained 2.7%. Silver for July delivery added 6.2 cents, or 0.4%, to $17.22 an ounce, ending about 5.9% higher for the week.
Investors piled into government bonds, driving yields to new lows. The yield on the 10-year Treasury note fell to 1.64%, its lowest level in nearly three years, while the yield on the benchmark German bond hit a record low of 0.02%.
Friday's participation was relatively light as 853 million shares changed hands on the NYSE floor.
Monday's economic data will include Import and Export Prices for May and May Retail Sales, which will each cross the wires at 8:30 ET. Separately, Business Inventories for April will be released at 10:00 ET.
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