Investing.com – Wall Street continued to tumble on Monday after a surprise victory of Brexit, as a vote for Britain to leave the European Union (EU) is known, in the U.K. referendum last week continued to spur risk-off trade.
At 16:11GMT or 12:11ET, the Dow 30 tumbled 246 points, or 1.41%, the S&P 500 sank 36 points, or 1.79%, while the tech-heavy NASDAQ Composite shed 110 points, or 2.33%.
The S&P 500 lost 2,000 for the first time since March as investors sold off on fears over the impact of the Brexit on the U.S. economy. For U.S. companies, exports to the U.K. were $56.1 billion to the U.K. in 2015, according to Department of Commerce data.
The Dow and the S&P both turned red for the year on Friday when the U.K. announced its historical decision to leave the EU, shocking stock markets worldwide.
Howard Silverblatt of S&P Dow Jones Indices said that global markets lost a record $2.08 trillion on Friday, with the S&P shedding $657 billion and the Dow Jones erasing $163 billion.
Federal Reserve (Fed) chair Janet Yellen had warned that the risk of a Brexit was a consideration at the U.S. central bank’s last policy meeting and that it could have significant economic repercussions.
Unfortunately, her first appearance after the vote that had been scheduled for Wednesday at the European Central Bank (ECB) forum in Sintra, Portugal, was cancelled on Monday.
Yellen had been scheduled to appear in a policy panel with Bank of England (BoE) governor Mark Carney and ECB president Mario Draghi. Due to recent events, Carney had reportedly cancelled his appearance over the weekend, while Draghi was expected to attend a meeting of European leaders in Brussels on Tuesday and Wednesday to discuss the outcome of the U.K. referendum.
It was unclear when Yellen’s first public appearance would take place.
With the Fed’s next monetary policy meeting just one month away, markets placed the odds for the no move to be made at 94% on Monday, with a 6% chance for the central bank to in fact lower rates.
Since no meeting is scheduled for August, the probability for a rate cut in September had risen to 22.9%, from Friday’s 7.2%, according to CME Group’s FedWatch tool.
In a light economic calendar day, Markit’s flash services purchasing managers’ index (PMI) remained unchanged, missing forecasts.
Markit chief economist Chris Williamson warned that the surveys were pointing towards meager growth of just 1% in the second quarter.
“Signs of weak economic growth and a sluggish labor market, combined with ‘Brexit’ uncertainty, suggest that already-cautious policymakers will be in no rush to tighten policy,” Williamson concluded.
Furthermore, the U.S. advanced trade deficit for widened further than expected.
Meanwhile, oil prices turned lower on Monday, pushed down by the general risk-off attitude and a stronger dollar hovering near three-month highs.
Specifically, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.94% at 96.53, at 16:12GMT or 12:12ET while U.S. crude futures fell 2.71% to $46.35 a barrel and Brent oil slumped 2.59% to $47.77.
On the business front, U.S. banks, the most exposed sector to the U.K., moved lower, with the likes of Bank of America (NYSE:BAC), JPMorgan Chase & Co (NYSE:JPM) or Citigroup (NYSE:C) all plunging more than 3% on Friday.
Energy stocks also were hit by the drop in crude, with both Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) losing more than 1%.
In M&A activity, Medtronic (NYSE:MDT) will purchase Heartware International Inc (NASDAQ:HTWR) for $1.1 billion in cash.
Dick’s Sporting Goods Inc (NYSE:DKS) placed a bid for 17 stores of its bankrupt rival Sports Authority, according to a Retuers report.
Lastly, the Financial Times reported that Intel (NASDAQ:INTC) was considering the sale of its cybersecurity division.