U.S. stocks plunged the most in 10 months, joining a selloff in global risk assets on speculation that the U.K. decision to leave the European Union will hamper worldwide growth.
Equities sank to session lows in afternoon trading, with the Dow Jones Industrial Average sliding more than 600 points. The S&P 500 Index extended losses after falling below the 2,050 level, an area where other pullbacks during the prior two months found a floor. Banks, technology, raw-materials and industrial shares capped their worst single-day declines in more than four years.
“Market participants are right to be concerned,” said Dean Maki, chief economist of investment firm Point72 Asset Management. “This is a legitimate risk-off event. We’re likely to see weaker growth as a result of this, and it’s appropriate that markets are reacting to this. Exports are likely to be weaker and earnings are a function of exports. U.S. exporters are going to have to deal with a stronger dollar again.”
The S&P 500 fell 3.6 percent to 2,037.30 at 4 p.m. in New York, the most since August 24. The benchmark slid 1.6 percent for the week and erased its 2016 gain, which reached as much as 3.7 percent earlier this month. The Dow dropped 611.21 points, or 3.4 percent, to 17,399.86, also the biggest retreat since August. The Nasdaq Composite Index tumbled 4.1 percent, the most in almost five years. About 15 billion shares traded hands on U.S. exchanges, more than double the daily average during the past three months.
The victory of the “Leave” campaign stunned many investors who’d put wagers on riskier assets over the past week as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four. The S&P 500 had gained 2 percent this week before the results were announced. The pound plunged the most in 30 years and European equities dropped as investors weighed the vote’s implications for the global economy.
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