NEW YORK: US stocks retreated on Tuesday (Jul 5) as bank shares sank on prospects of greater pressure on their margins from falling interest rates.
Oil service company shares were also hit hard by a more than four per cent fall in the price of crude as OPEC production appeared back on the rise.
The Dow Jones Industrial Average ended down 108.75 points (0.61 per cent) at 17,840.62.
The broad-based S&P 500 fell 14.40 points (0.68 per cent) to 2,088.55, while the tech-rich Nasdaq Composite Index lost 39.67 points (0.82 per cent) at 4,822.90.
The prospect of Britain’s decision to exit the European Union dragging down global growth appeared to weigh on markets generally, said Jack Ablin of BMO Private Bank.
He noted that the Bank of England warned on Tuesday that risks to financial stability were materialising after Britain’s shock vote against EU membership.
A flight to safety in the markets sent the yield on the US 10 year Treasury bond to a record low of about 1.36 per cent, spelling lower earnings for savers and tighter lending margins for banks.
Morgan Stanley led a rout in major bank shares with a 3.6 per cent loss. Citigroup fell 3.3 per cent, and JPMorgan Chase and Bank of America both lost 2.8 per cent.
In the oil patch, Halliburton lost 4.4 per cent and Baker Hughes fell 3.9 per cent as oil prices sank.
Tesla shares rebounded from an early sharp tumble to end down 1.2 per cent, hit by the company’s below-forecast second quarter production report and concern over its self-drive technology following a fatal accident.