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U.S. stocks fall sharply, as U.S. 10-year yields fall to record-lows

Published 07/05/2016, 04:20 PM
Updated 07/05/2016, 04:36 PM
The Dow, NASDAQ and S&P 500 fell sharply on Tuesday, erasing some post-Brexit gains
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Investing.com -- U.S. stocks fell sharply on Tuesday erasing some of the gains from last week's post-Brexit rally, as widespread concerns related to the viability of banking stocks in the euro area and a continued global bond yield rout served as a drag on equities on Wall Street.

The Dow Jones Industrial Average fell 108.75 or 0.61% to, while the S&P 500 Composite index dropped 108.75 or 0.61% to 17,840.62, as declines among energy stocks and Dow transports weighed heavily on the major indices. For the session, crude futures plunged more than 4% dropping below $48 a barrel due to reports of an unexpected build at the Cushing Oil Hub in Oklahoma. On the S&P 500, nine of 10 sectors closed lower, as stocks in the Energy, Financials and Basic Materials industries lagged. Stocks in the defensive-minded Utilities sector led, gaining more than 0.60% on the session.

The NASDAQ Composite index, meanwhile, lost 39.67 or 0.82% to 4,822.90, amid a disappointing session among several top semiconductor stocks.

During Tuesday's session, yields on the U.S. 10-Year and U.S. 30-Year fell to intraday lows of 1.357% and 2.131% respectively, each dropping to their lowest levels on record. It came as investors continued to seek safety in safe-haven assets, as bank stocks in Italy and England tumbled further, extending Brexit-inspired losses. Investors also monitored political developments on Tuesday after FBI director James Comey said the bureau would not recommend charges against presumptive democratic presidential frontrunner Hillary Clinton upon the completion of a comprehensive e-mail probe. White House spokesman Josh Earnest said U.S. president Barack Obama would not comment on the issue at a campaign stop with Cllinton on Tuesday in Charlotte.

The top performer on the Dow was Johnson & Johnson (NYSE:JNJ), which gained 0.98 or 0.81% to 122.27. Since the final results of the Brexit referendum were tallied on June 24, shares in Johnson & Johnson have surged approximately 7%. Over the last two weeks, Johnson & Johnson and other high-dividend plays have become attractive to investors during a broad risk-off trade. The worst performer was JPMorgan Chase & Co (NYSE:JPM), which fell 1.71 or 2.79% to 59.55, as the plunge in bond yields and the sell-off in European banking stocks spilled over into the U.S. financial sector. Shares in Barclays (LON:BARC) Bank PLC Pd ADR (NYSE:BCS_pd) and Royal Bank of Scotland Group PLC (LON:RBS) Pl ADR (NYSE:RBS_pl), two global banks with deep exposure to economic activity in Britain, are both down more than 20% since the surprising Brexit decision.

The biggest gainer on the NASDAQ was NVIDIA Corporation (NASDAQ:NVDA), which rose 0.69 or 1.48% to 47.35. Nvidia closed just above Dollar Tree Inc (NASDAQ:DLTR), which added 0.69 or 1.48% to 47.35. Shares in the Virginia-based discount variety chain store are up approximately 16% since touching down to 52-week lows at 61.38 last October. The worst performer was Skyworks Solutions Inc (NASDAQ:SWKS), which fell 3.78 or 6.04% to 58.82 after analysts from Pacific Crest downgraded the Massachusetts-based semiconductor company, amid heightened risks related to Apple Inc (NASDAQ:AAPL)'s rollout of the iPhone 7. As part of their analysis, Pacific Crest anticipates that initial iPhone 7 demand could slump by 15-20% in comparison with its iPhone 6 counterpart.

On the New York Stock Exchange, declining issues outnumbered advancing ones by a 2,227-799 margin.

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