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Dow closes down triple digits as Brexit fears weigh

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 latest Brexit poll, released midday ET Monday by The Guardian, showed a gain in the "leave" camp over the "remain."

"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.

The Dow Jones industrial average closed near session lows, off about 132 points. Visa contributed the most to declines, followed by Apple, 3M and Microsoft as most constituents ended lower.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, spiked above 21 for the first time since Feb. 25.

Year-to-date performance


Pound sterling was mildly lower against the dollar, near $1.424. The dollar index traded about 0.25 percent lower, with the euro near $1.13 and the yen around 106.2 yen against the greenback.

"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 hit its lowest since mid-April against the dollar before attempting 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. Stocks held lower after the official poll release and extended losses into the close, with the Nasdaq composite briefly falling 1 percent.

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.

Materials fell more than 1.2 percent to lead S&P 500 decliners, followed by more than 1 percent declines in information technology and industrials.

Shares of Microsoft closed 2.6 percent lower. Earlier, the stock briefly fell more than 4.5 percent after news 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 closed 46.6 percent higher, helping the Global X Social Media Index ETF (SOCL) rise almost 4 percent.

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. Shares of Symantec closed nearly 5.3 percent higher.

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 closed 1.5 percent lower after its annual Worldwide Developers Conference.

In other corporate news, Walmart said Saturday its Canada stores will stop accepting Visa cards because the credit card provider charges merchants "unacceptably high" fees.

Treasury yields were lower in afternoon trade, with the 2-year yield around 0.72 percent after earlier touching its lowest since May 9, and the 10-year yield near 1.61 percent, around 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.

Symbol
Name
Price
 
Change
%Change
DJIA
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S&P 500
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NASDAQ
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The Dow Jones industrial average closed down 132.86 points, or 0.74 percent, at 17,732.48, with Microsoft leading decliners and Exxon Mobil the top advancer.

The S&P 500 closed down 17.01 points, or 0.81 percent, at 2,079.06, with materials leading all 10 sectors lower.

The Nasdaq composite closed down 46.11 points, or 0.94 percent, at 4,848.44.

About three stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 855 million and a composite volume of nearly 3.3 billion in the close.

Gold futures for August delivery settled up $11.00 at $1,286.90 an ounce.

Correction: This story has been updated to reflect pound sterling hit its lowest against the dollar since mid-April.

On tap this week:

Tuesday

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

Wednesday

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

Thursday

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

Friday

8:30 a.m. Housing starts

8:30 a.m. Building permits

*Planner subject to change.