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Jun 13, 2016

Wall Street at Close Report, by CNBC on June 13, 2016: Dow Closes Down Triple Digits as Brexit Fears Weigh

Evelyn Cheng
U.S. stocks closed lower Monday, as investors looked ahead to the week's scheduled Fed meeting and the upcoming U.K. vote on whether to leave the European Union.

The Dow Jones industrial average fell more than 100 points in afternoon trade with Visa, Microsoft and Apple contributing the most to declines as most constituents traded lower.
The latest Brexit poll, released midday ET Monday by The Guardian, showed a gain in the "leave" camp over the "remain."

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, climbed above 20.5 to its highest since Feb. 29.

"The unknown is really again creating that anxiety right now," said Daniel Deming, managing director at KKM Financial. "There's no reason to see implied volatility jumping like it is when realized volatility is very subdued."
"All these polls continue to roll out. The probability of them leaving has increased and that creates more uncertainty than them staying," he said.
Pound sterling traded mildly lower against the U.S. dollar. The dollar index traded about 0.2 percent lower, with the euro near $1.123 and the yen around 106.2 yen against the greenback as of 2:40 p.m. ET.

"Maybe the market's getting a little acclimated to the whole Brexit (vote)," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie. He also noted the official poll report came out after the close of markets in Europe.

Earlier, sterling recovered from its lowest against the dollar since mid-May to trade higher. FX traders attributed the mid-morning turnaround to a rumor that the "remain" camp gained a lead over the "leave" camp in an expected poll.

The major stock index averages briefly came off session lows to briefly attempt gains in mid-morning trade.

There's a "continued theme of weak global growth, but you get a major merger-acquisition in the cloud tech space and that kind of helped the market so far," said Peter Coleman, head trader at Convergex.

Tech was among the greatest S&P decliners. Shares of Microsoft briefly fell more than 4.5 percent in morning trade, after news released just before the market open that the tech giant is purchasing LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion that is expected to close this calendar year. Jeff Weiner will remain CEO of LinkedIn, reporting to Satya Nadella, CEO of Microsoft, according to the release.

Shares of LinkedIn jumped more than 45 percent in afternoon trade, helping the Global X Social Media Index ETF (SOCL) rise 3.9 percent in afternoon trade.
In other deal news, technology security firm Symantec, which makes the Norton antivirus, said it would buy privately held cybersecurity company Blue Coat for $4.65 billion.
Scott Kessler, deputy global director of equity research at S&P Global Market Intelligence, said he is interested in comments from Oracle's earnings, due Thursday, on the tech space and dealmaking.

"It's a combination of growth and trying to figure out how to unlock value," he said, noting some of Monday's trading was in anticipation of further deals.

Apple briefly fell more than 1.5 percent and continued to trade about 1 percent lower amid its annual Worldwide Developers Conference.

Treasury yields were lower in afternoon trade, with the 2-year yield around 0.71 percent, its lowest since May 11, and the 10-year yield near 1.62 percent after earlier touching its lowest since Feb. 11.

U.S. crude oil futures settled down 19 cents, or 0.39 percent, at $48.88 a barrel.

"To me the worry is really low growth that gives you very little cushion and room for error," said Maris Ogg, president, Tower Bridge Advisors.

The week's scheduled Federal Reserve meeting comes ahead of the U.K. vote on June 23 on whether to leave the European Union.
U.S. stocks closed lower Friday, weighed by the latest poll that showed an increase in respondents favoring the "leave" camp.
The major European indexes were more than 1.5 percent lower. The German 10-year bund yield held near record lows.
In Asia, the Nikkei 225 fell 3.5 percent while the Shanghai composite lost 3.2 percent and the Hang Seng fell 2.5 percent.


DJIA Dow Industrials 17732.83
-132.51 -0.74%
S&P 500 S&P 500 Index 2079.09
-16.98 -0.81%
-46.11 -0.94%

In afternoon trade, the Dow Jones industrial average declined 55 points, or 0.31 percent, to 17,807, with Microsoft leading decliners and Exxon Mobil the top advancer.
The S&P 500 traded down 8 points, or 0.37 percent, to 2,088, with materials leading nine sectors lower and utilities the only advancer.
The Nasdaq composite declined 25 points, or 0.50 percent, to 4,869.
About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 507 million and a composite volume of nearly 2.3 billion in afternoon trade.
Gold futures for August delivery settled up $11.00 at $1,286.90 an ounce.
On tap this week:

FOMC meeting begins
6 a.m. NFIB survey
8:30 a.m. Retail sales
8:30 a.m. Import prices
10 a.m. Business inventories
8:30 a.m. May PPI
8:30 a.m. Empire State survey
9:15 a.m. Industrial production
2 p.m. FOMC statement and projections
2:30 p.m. Fed Chair Janet Yellen press briefing
4 p.m. TIC data
8:30 a.m. Initial claims
8:30 a.m. CPI
8:30 a.m. Philadelphia Fed survey
8:30 a.m. Current account
10 a.m. NAHB survey
8:30 a.m. Housing starts
8:30 a.m. Building permits
*Planner subject to change.