Economic growth worries, oil slump drag Wall St. lower – Metro US

Economic growth worries, oil slump drag Wall St. lower

By Marcus E. Howard

(Reuters) – Stocks fell on Wall Street Tuesday following their best weekly performance of the year as investors faced continued uncertainty in the wake of Britain’s decision to leave the European Union and as tumbling oil prices weighed on energy shares.

U.S government bond yields reached record lows as investors found refuge in the perceived safety of Treasuries and uncertainty from Britain’s vote to exit the EU, known as Brexit, fueled worries about a global economic slowdown.

Four of the top five decliners on the S&P 500 were bank stocks, with JPMorgan , down 2.8 percent t0 $59.55, weighing the most. The financial sector of the S&P <.SPSY> was down 1.5 percent

“Brexit is a friction on economic activity and that’s bad for banks,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

“Low interest rates are horrible for financials, specifically for banks. The spread between where they borrow and where they lend is getting closer together.”

The Dow Jones industrial average <.DJI> fell 108.75 points, or 0.61 percent, to 17,840.62, the S&P 500 <.SPX> lost 14.4 points, or 0.68 percent, to 2,088.55 and the Nasdaq Composite <.IXIC> dropped 39.67 points, or 0.82 percent, to 4,822.90.

Brent crude fell 3.9 percent and U.S. crude lost 4.5 percent as investors worried that Brexit would slow the global economy, making it unlikely energy demand will grow enough to absorb a persistent supply glut.

The energy sector of the S&P 500 <.SPNY> fell 1.9 percent. The materials index <.SPLRCM> was also down 1.9 percent.

Tepid U.S. data added to overall growth worries. Data showed new orders for U.S. factory goods fell in May on weak demand for transportation and defense capital goods.

Investors have been seeking safe-haven assets in an uncertain economic environment. Weak data from China added to the nervousness stemming from Brexit.

“After a surprisingly big bounce last week, I think we’re in a little bit of a risk-off trading today – the uncomfortable feeling that maybe all is not fully well given Brexit,” said Jeffrey Carbone, senior partner at Cornerstone Financial Partners in Cornelius, North Carolina.

Foreign exchange volatility as well as the economic uncertainty after Britain’s vote to leave the EU also have fueled worries about a projected profit rebound in the United States. U.S. companies have been stuck in an earnings recession since last year.

Tesla’s shares fell 1.2 percent to $213.98 after the electric car maker missed vehicle delivery targets for the second consecutive quarter.

Netflix rose 1.3 percent to $97.91 after it reached an agreement with Comcast for its services to be available on the cable company’s set-top box. Comcast closed down 0.4 percent at $65.01.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 2.75-to-1 and on the Nasdaq a 2.67-to-1 ratio favored decliners.

The S&P 500 posted 69 new 52-week highs and one new low; the Nasdaq recorded 73 new highs and 30 new lows.

About 6.9 billion shares changed hands in U.S. exchanges, compared with the 7.7 billion daily average over the past 20 sessions.

(Additional reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Rodrigo Campos and James Dalgleish)

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