Concerns ahead of Federal Open Market Committee (FOMC) policy meeting and a possible “Brexit” led major benchmarks to end in the red for third consecutive days on Monday. Meanwhile, decline in shares of Apple and Microsoft weighed on technology sector, which also had a negative impact on markets. Rising uncertainties helped the fear-gauge VOLATILITY S&P 500 to gain 43% over the last two days, registering its biggest two-day increase since Aug 2015. It crossed the crucial 20-mark for the first time since Mar 1. The tech-heavy Nasdaq declined to its lowest level since May 23.
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 0.7%, or 132.86 points, to close at 17,732.48. The S&P 500 fell 0.8% to close at 2,079.06. The tech-laden Nasdaq Composite Index closed at 4,848.44, losing 0.9%. The fear-gauge CBOE Volatility Index (VIX) surged 23.1% to settle at 20.97. A total of around 6.7 billion shares were traded on Friday, lower than the last 20-session average of 6.75 billion. Decliners outpaced advancing stocks on the NYSE. For 74% stocks that declined, 24% advanced.
Increasing possibility of “Brexit” and concerns regarding its impact on the global economy continued to dampen investor sentiment. A poll conducted by The Independent recently showed that percentage of people supporting “Brexit” came in ahead of those who are against it. A referendum regarding “Brexit” will be held on June 23. These concerns led British pound to decline 0.2% against dollar to 1.4231 pound. The currency decreased around 3.4% against the dollar in the year-to-date timeframe.
Meanwhile, investors took a cautious stance ahead of the FOMC policy meeting which is scheduled to start today. Though concerns regarding May’s jobs report and “Brexit” reduced the rate hike possibility by a significant extent in this meeting, investors will look for clues regarding the timing of the hike. This had a significant impact on U.S. government bond yields. Yields on U.S. 10-year Treasury note declined from 1.639% to 1.616%, reaching its lowest level since Dec 2012.
Separately, news that LinkedIn Corporation was being acquired by Microsoft Corporation ( (MSFT - Free Report) also had a significant impact on investor sentiment. Microsoft will acquire the professional social media site in an all-cash deal of $26.2 billion. Though this development boosted LinkedIn’s shares, which surged 46.6%, shares of Microsoft declined 2.6% and the technology sector also suffered.
Moreover, shares of Apple Inc. (AAPL - Free Report) declined 1.5% after hosting Worldwide Developers Conference in San Francisco. It also announced that Siri, which was exclusively enabled only in iPhones, will also be available in MacBook computers. Decline in share of Microsoft and Apple dragged the Technology Select Sector SPDR (XLK) by 1.1%, making it the biggest losers among the S&P 500 sectors. Other key tech stocks including, Facebook, Inc. (FB - Free Report) , HP Inc. (HPQ - Free Report) and QUALCOMM Incorporated (QCOM - Free Report) fell 2.3%, 2.6% and 1.9%, respectively.
Also, the Materials Select Sector SPDR (XLB) also declined 1.1%. Key material stocks including, International Paper Company ( (IP - Free Report) , Monsanto Company , The Dow Chemical Company (DOW - Free Report) and E. I. du Pont de Nemours and Company ( (DD - Free Report) fell 2.8%, 2%, 1.3% and 1.2%, respectively. All the S&P 500 sectors ended in negative territory.