Investors fear the unprecedented decision could destabilize the region's economy
U.S. stocks plunged on Friday, 24 June 2016 closing slightly above session lows, a day after U.K. citizens voted to end the country's membership in the European Uniona historic rejection of Europe's political order. Investors fear the unprecedented decision could destabilize the region's economy, slowing global growth and threatening financial stability. Wall Street joined a global equity rout that saw even sharper plunges in Europe, move that come after global markets rallied a day earlier on a bet that Britons would vote to remain in the trading bloc.
On Friday, the main U.S. indexes all closed down more than 3%, wiping out year-to-date gains for both the S&P 500 and the Dow, while adding to the 2016 loss for the Nasdaq. The Dow plunged 611.21 points, or 3.4%, to close at 17,399.86, all 30 blue-chip stocks finishing lower, led by bank stocks. J.P. Morgan Chase & Co dropped 7% and Goldman Sachs Group dove 7.1%. Earlier, the average was down by as many as 655 points. The S&P 500 dropped 75.91 points, or 3.6% to close at 2,037.41, following an earlier 81-point deficit. The Nasdaq Composite plummeted 202.06 points, or 4.1%, to finish at 4,707.98, for its worst one-day percentage drop since August 2011.
Nine of the 10 main sectors closed sharply lower. Financials, materials, and tech stocks led the losses. Utilities closed fractionally higher due to heightened demand for safer, defensive plays.
On Friday, the Fed said it was prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.
Global equity markets tumbled overnight as participants reacted to a surprise result from yesterday's Brexit vote. The "Leave" camp carried the referendum after receiving 51.9% of vote. In response, European indices paced the retreat as investors looked ahead to the multi-year legal process of withdrawing the UK from the EU. Additionally, foreign exchange markets were in focus as the pound sank to a three-decade low (1.3231) against the dollar.
In the wake of the shocking Brexit vote, U.K. Prime Minister David Cameron said Friday morning he will resign. Cameron has been campaigning for the remain camp.
On the data front, economic data was overshadowed by the Brexit vote. Market reaction to durable-goods orders was muted. Consumer sentiment sank to 93.5 in June, according to the University of Michigan.
Bullion prices ended higher at Comex on Friday, 24 June 2016. Gold futures rallied on Friday to finish at their highest level in nearly two years as investors rushed to buy the metal in the wake of the U.K.'s decision to exit from the European Union. Gold tends to rally in times of economic, market or political uncertainty because precious metals are considered a haven asset. As might be expected, riskier assets, including U.S. stocks, tumbled.
August gold jumped $59.30, or 4.7%, to settle at $1,322.40 an ounce with prices marking the largest single-session dollar and percentage climb since September 2013. Gold futures traded as high as $1,362.60. That's nearly $100 an ounce above Thursday's settlement, which marked a fifth-straight session decline. For the week, gold was up 2.1% after settling last Friday at $1,294.80.
July silver rallied by 43.6 cents, or 2.5%, to $17.789 an ounce, with prices set for the highest settlement since late April. The metal saw a 2.2% weekly gain.
The U.S. Dollar Index, the measure of the buck against a basket of currencies, ended up 2%. The dollar and gold often move inversely, but as other vote-sensitive currencies moved lower against the dollar, the greenback logged short-term gains that unhooked the currency from its typically inverse relationship with gold.
Oil futures dropped nearly 5% on Friday, 24 June 2016 to their lowest level in about a week, after the U.K.'s vote to leave the European Union in a nationwide referendum triggered a selloff across markets. The U.K.'s vote to end its membership in the EU has spooked investors, sapping appetite for assets viewed as risky, including stocks and commodities, amid the uncertainty surrounding the next step for Europe's trade bloc.
August West Texas Intermediate crude dropped $2.47, or 4.9%, to settle at $47.64 a barrel on the New York Mercantile Exchange. Prices logged their largest one-day percentage decline since early February. Prices lost 0.7% from last Friday's $47.98 settlement for the front-month July contract, which expired Tuesday. The August WTI contract itself, was down 1.9% for the week.
The Treasury complex settled off its session high as the yield on the 10-yr note finished lower by 17 basis points at 1.57%.
Friday's participation was above the recent average as more than 1.1 billion shares changed hands on the NYSE floor.
Monday's economic data will be limited to the International Trade in Goods Report for May, which will be released at 8:30 ET.
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