Stock Market News For June 28, 2016

Britain’s decision to “Leave” the European Union continued to drag the benchmarks into negative territory for two straight sessions. All the three key U.S. indexes declined more than 1.5% yesterday, posting their worst two session declines in nearly 10 months. Most of the key S&P 500 sectors tumbled yesterday, with energy, materials and financials ending as the worst performing stocks. Only the natural safe-havens, utilities and telecom managed to end in positive territory.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) decreased 1.5%, or 260.51 points to close at 17,140.24. The S&P 500 fell 1.8% to close at 2,000.54. The tech-laden Nasdaq Composite Index closed at 4,594.44, losing 2.4%. However, the fear-gauge CBOE Volatility Index (VIX) decreased 7.4% to settle at 23.85. A total of around 10.5 billion shares were traded on Monday, higher than the last 20-session average of 7.3 billion shares. Decliners significantly outpaced advancing stocks on the NYSE. For 80% stocks that declined, 19% advanced.

Last week, U.K.’s voted in favor of “Brexit”. Total percentage “Leave” vote was 51.9%, as compared to “Remain” vote of 48.1%. Following the results, British Prime Minister David Cameron announced that he will resign by October. Britain’s surprise referendum results weighed on key U.S. indexes for two consecutive trading days. Both the Dow and S&P 500 ended at their lowest level since mid-March and also closed below their 200 day average for the first time in last three months.

Moreover, the pound hit a 31-year low of $1.3197 late Monday, which in turn had a negative impact on U.S. companies which generate major portion of their sales from overseas operations. A record decline in pound boosted the U.S. dollar. The U.S. Dollar index (DXY) rose 1.1%, reaching its highest settlement in three months. Oil prices decreased following a stronger dollar. Both WTI and Brent crude fell 2.8% and 2.7% to $46.33 a barrel and $47.16 per barrel, respectively. Brent crude reached its lowest level since May 10.

Slump in oil prices led the Energy Select Sector SPDR (XLE (NYSE:XLE)) to decrease 3.2%. Dow components Exxon Mobil Corporation (NYSE:XOM) ( XOM) and Chevron Corporation (NYSE:CVX) (CVX) decreased 0.6% and 1.5%, respectively.

Also, the Materials Select Sector SPDR (XLB) decreased 3.4% and was the biggest decliner among the S&P 500 sectors. Key components from materials sector including Freeport-McMoRan Inc. (FCX), Dow Chemical Company (NYSE:DOW) ( DOW), LyondellBasell Industries N.V. (LYB), International Paper Company (NYSE:IP) (IP) and E. I. du Pont de Nemours and Company ( DD), fell 4.3%, 3.1%, 4.8%, 4.2% and 2.9%, respectively.

Further, the financial sector continued to encounter a major sell-off after the referendum results. The Financial Services Select Sector SPDR (XLFS) fell 3%. Top holdings from this sector such as Bank of America Corporation (NYSE:BAC) (BAC), Citigroup Inc (NYSE:C). ( C) and Wells Fargo & Company (NYSE:WFC) (WFC) declined 6.3%, 4.5% and 1.5%, respectively. Dow components JPMorgan Chase & Co (NYSE:JPM) (JPM) and Goldman Sachs Group (NYSE:GS), Inc. (GS) decreased 3.3% and 1.7%, respectively.

Separately, utilities and telecom were the only gainers among the S&P 500 sectors. The Utilities Select Sector SPDR (XLU) rose 0.8%. Key utilities stocks including NextEra Energy (NYSE:NEE), Inc. (NEE), Southern Company (NYSE:SO) ( SO) and Duke Energy Corporation (NYSE:DUK) (DUK), increased 3.3%, 2% and 1.9%, respectively. Further, the telecom services sector within the S&P 500 gained 0.6%. Some of its key holdings including AT&T (NYSE:T), Inc. (T) and Verizon Communications Inc (NYSE:VZ). (VZ) advanced 1.2% and 0.6%, respectively.