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U.S. stocks fall as wary investors anticipate Fed meeting, Brexit vote

Outside the New York Stock Exchange.
(Mark Lennihan / Associated Press)

U.S. and global stocks fell for a third day Monday as concerned investors waited to see what the Federal Reserve would do with interest rates this week and anxiously awaited the fate of Britain’s membership in the European Union.

LinkedIn shares jumped $61.13, or nearly 47%, to $192.21 after Microsoft announced plans to buy the company.

Firearms makers climbed as investors wondered if the mass shooting in Orlando, Fla., on Sunday will lead to greater sales. Sturm Ruger advanced $4.88, or 8.5%, to $62.29, its largest one-day gain in more than a year, and Smith & Wesson rose $1.47, or 6.9%, to $22.88.

Similar gains have been recorded after other mass shootings such as the one last year in San Bernardino. The prospect of additional background checks and other regulations often boosts demand for guns.

The Dow Jones industrial average lost 132.86 points, or 0.7%, to 17,732.48. The Standard & Poor’s 500 index fell 17.01 points, or 0.8%, to 2,079.06 and the Nasdaq composite fell 46.11 points, or 0.9%, to 4,848.44.

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The Federal Reserve had been expected to start raising interest rates, but now appears likely to remain in a wait-and-see mode. The central bank’s two-day meeting will start Tuesday, with a decision on interest rates Wednesday afternoon. Fed Chairwoman Janet L. Yellen is scheduled to hold a news conference after the interest rate decision.

Last month many investors were betting that the Fed would raise interest rates, but the two most recent monthly jobs reports in the U.S. have put a damper on those expectations.

Investors’ lack of confidence that the Fed will raise rates could be seen in bonds and the U.S. dollar. The yield on the 10-year U.S. Treasury note fell to 1.61% from 1.64% on Friday, its lowest yield so far this year. The dollar, while off its lows, is still also trading near its lows for the year against other major currencies.

Combined with the weight of the Fed decision, stocks, particularly in Europe, remain under pressure on investor concerns over whether Britain will choose to remain in the European Union in a June 23 referendum. Recent polls have shown the race is tight, with some polls showing a majority of British voters are in favor of exiting the EU, a development known informally as “Brexit.”

“This week’s Fed meeting feels like a bit of a sideshow, given the focus on Brexit and the market’s appropriate belief that the Fed is unlikely to [raise interest rates] ahead of such an event,” said John Briggs, head of strategy for the Americas at RBS, in a note to investors.

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UPDATES:

2:50 p.m.: This article was updated after the markets closed.

This article was originally published at 7:39 a.m.


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