Stocks Extend Sell-Off Amid Ongoing Brexit Worries - U.S. Commentary

(RTTNews) - Stocks moved sharply lower during trading on Monday, extending the sell-off that was seen last Friday. With the steep losses on the day, the major averages fell to their lowest closing levels in well over three months.

The major averages ended the day firmly in negative territory but off their lows of the session. The Dow plunged 260.51 points or 1.5 percent to 17,140.24, the Nasdaq tumbled 113.54 points or 2.4 percent to 4,594.44 and the S&P 500 plummeted 36.87 points or 1.8 percent to 2,000.54.

The extended sell-off on Wall Street came as traders continued to react negatively to the U.K.'s vote to leave the European Union.

Concerns about the economic impact of the so-called Brexit vote inspired another day of broad based weakness.

The vote led Standard & Poor's to cut the U.K.'s credit rating to AA from AAA with a negative outlook.

Britain is under pressure to expedite its exit from the EU in order to provide some stability to the financial markets.

Following the vote, Federal Reserve Chair Janet Yellen has pulled out of a central bank conference organized by the European Central Bank.

Yellen had been scheduled to speak on a panel with Bank of England Governor Mark Carney and ECB President Mario Draghi on Wednesday.

The continued focus on the Brexit fallout may overshadow U.S. reports on personal income and spending, consumer confidence, and manufacturing activity due later in the week.

Among individual stocks, shares of BHP Billiton (BHP) showed a notable decrease on the day after the miner announced plans to increase exploration spending next year.

Dick's Sporting Goods (DKS) also came under pressure after Reuters said the retailer has submitted a bid for 17 Sports Authority stores.

On the other hand, shares of HeartWare International (HTWR) moved sharply higher after the company agreed to be acquired by Medtronic (MDT) for $1.1 billion in cash.

Sector News

Electronic storage stocks showed a particularly steep drop on the day, dragging the NYSE Arca Disk Drive Index down by 6.8 percent. The sharp drop pulled the index down to its lowest closing level in a month.

Quantum (QTM), Western Digital (WDC), and Seagate Technology (STX) turned in some of the storage sector's worst performances.

Significant weakness was also visible among oil service stocks, as reflected by the 5.2 percent loss posted by the Philadelphia Oil Service Index. The index also fell to its worst closing level in over a month.

The weakness among oil service stocks came amid a steep drop by the price of crude oil, with crude for August delivery tumbling $1.31 to $46.33 a barrel.

Financial, networking, semiconductor, and biotechnology stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Meanwhile, utilities stocks were among the few groups to buck the downtrend, resulting in a 1.6 percent jump by the Dow Jones Utilities Average. With the gain, the index reached a record closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets all moved sharply lower on the day. While the U.K.'s FTSE 100 Index tumbled by 2.6 percent, the French CAC 40 Index and the German DAX Index both plummeted by 3 percent.

In the bond market, treasuries showed a strong move to the upside amid the continued weakness on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 11.9 basis points to 1.460 percent.

Looking Ahead

While reaction to the Brexit vote may continue to impact trading on Tuesday, traders will also be presented with reports on first quarter GDP, home prices, and consumer confidence.