NEW YORK: U.S. stocks fell for the fourth consecutive session Tuesday, led by declines in financial shares.
Recent market action has dragged the S&P 500 back from near-record levels as investors consider coming central-bank decisions, the state of the global economy and next week’s U.K. vote on European Union membership.
The S&P 500 posted its largest four-day decline since February in the period ended Tuesday, and is now 2.6% below its all-time closing high.
Meanwhile, investors have rushed to buy government bonds perceived as safe, pushing those yields lower and, in some cases, into negative territory. Yields fall when bond prices rise.
“People got a lot more nervous very quickly,” said Steve Sosnick, an options trader at Timber Hill, the market-making division of Interactive Brokers. “The ‘Brexit’ talk is not new, but it seems like…the U.S. equity market finally decided to pay attention to it,” he added, referring to the U.K. vote on EU membership.
The Dow Jones Industrial Average fell 57.66 points, or 0.3%, to 17674.82. The S&P 500 lost 3.74, or 0.2%, to 2075.32 and the Nasdaq Composite sank 4.89, or 0.1%, to 4843.55.
Financial stocks led the S&P 500 lower, falling 1.5%. The financial sector has dropped more than 4% so far in June, sharply outpacing declines in other sectors. The moves have come as bond yields have dropped around the world and as investor expectations for an interest-rate increase in the next few months have faded.
Synchrony Financial, which issues credit cards, on Tuesday increased its forecast for losses over the next 12 months and said it was building up reserves for future losses. Synchrony shares fell $3.99, or 13%, to $26.45 and sparked declines in other credit-card issuers. Capital One Financial shares lost 4.57, or 6.6%, to 64.43.
Still, losses in U.S. stocks have paled in comparison with index declines in Europe, which would be hit more by the U.K. vote, analysts said.
“If there’s one place in the world where we could put money in, it would be large-cap U.S. stocks,” said Sean Lynch, co-head of global equity strategy for the Wells Fargo Investment Institute. He said Tuesday’s retail-sales data suggested the U.S. economy could pick up in the second quarter, which would bode well for a recovery in corporate profits and stocks.
The Stoxx Europe 600 declined 1.9% and has now tumbled 7.4% over the past five trading sessions.
Polls have continued to narrow around the U.K.’s June 23 referendum, triggering concerns about the future of the European economy and the health of its financial markets. Investors are concerned that a U.K. exit could spark a prolonged period of uncertainty for European assets and puncture a delicate economic recovery in the region.
Such an exit “would cause some short-term chaos,” said Michael Antonelli, equity sales trader at Robert W. Baird.
The 10-year German government-bond yield fell below zero for the first time ever Tuesday. The yield on the 10-year U.S. Treasury note closed at its lowest since December 2012, slipping to 1.611% from 1.616% on Monday.
“The market is quite comfortable with buying bonds at very low yield levels purely because they feel those yields will get lower,” said James Athey, fixed-income fund manager at Aberdeen Asset Management, noting he expects core government-bond yields to remain under pressure ahead of the U.K. vote. Buying from the European Central Bank also has helped push yields on eurozone government debt lower, lifting prices many investors think will continue in coming months.
Meetings of the Federal Reserve, Bank of Japan and Bank of England will be scrutinized later this week for clarity on the future of monetary policy.
U.S. crude oil fell 0.8% to $48.49 a barrel as the dollar strengthened.
The euro lost 0.8% against the dollar to $1.1207, while the British pound fell 1.1% against the dollar to $1.4114.
