U.S. stocks plunged more than 3 percent Friday to end in the red for the year so far after Britain surprised markets by voting to leave the European Union.
"It's a combination of at first positioning, plus the reality that this issue is not the most simple to address and something you don't have precedent for," said Lefteris Farmakis, a macro strategist at UBS.
The Dow Jones industrial average closed down 610 points — its eighth-largest point loss ever — with Goldman Sachs contributing the most to declines. On a percentage basis the Dow and S&P had their worst day since August 2015, while the Nasdaq composite's 4.1 percent decline was the index's worst since August 2011.
With Friday's drop, both the Dow and S&P erased their gains for the year so far. The Nasdaq composite was nearly 6 percent lower year-to-date.
Financials dropped 5.4 percent in their worst day since August 2011 to lead nine S&P 500 sectors lower.
Investors took a defensive stance with utilities eking out a gain as the only advancing S&P sector. Trade volume was the highest of the year so far, ahead of the Russell index rebalancing scheduled for after the close.
U.S. crude oil futures settled down $2.47, or 4.93 percent, at $47.64 a barrel.
Pound sterling fell more than 10 percent against the U.S. dollar between its high of $1.500 touched late Thursday to the overnight low of $1.3224, its lowest since 1985. Sterling was last near $1.366.
"The biggest thing is markets are operating and there isn't a liquidity crisis. This isn't a Lehman moment," said Chris Gaffney, president, EverBank World Markets.
"I think investors mispriced the risk and quickly repriced it," he said. "That's what we're seeing now, the repricing of risk with heightened uncertainty."