Worst day in 10 months as Wall Street reacts to ‘Brexit’
NEW YORK – The S&P 500 turned negative for the year-to-date on Friday as Wall Street suffered its largest selloff in 10 months after Britain’s decision to leave the European Union caught traders wrong-footed.
In the busiest trading volume for a single session in nearly five years, financial stocks .SPSY led the decline on the S&P 500 with a 5.4 percent drop -the largest for the sector since November 2011.
The S&P 500 lost all the year’s gains and suffered its largest decline since late August last year.
Equity futures neared an 11-month high to start the overnight session as markets wrongly bet that the “Remain” camp would prevail in Britain’s referendum, but sold off sharply as the results showed otherwise – even triggering a market stop put in place to curtail volatility.
The decline during regular market hours seemed more orderly, and the S&P managed to close in the area of what analysts called significant technical support, near 2,040.
Still, many expect the next weeks to remain volatile.
The CBOE Volatility index .VIX ended up 49 percent at 25.76, its highest level since Feb. 11 – when equities hit their lows of the year.
“The market has really not fully digested the second-order impacts of this,” said Stephen Auth, chief investment officer at Federated Investors in New York.