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Stocks close with losses on new Brexit jitters

Trader Vincent Napolitano, center, works on the floor

Trader Vincent Napolitano, center, works on the floor of the New York Stock Exchange, Wednesday, June 29, 2016. Credit: AP / Richard Drew

Stocks closed with losses Tuesday as investors found new worries in the British financial system and Brexit, the country’s plan to leave the European Union.

Investors flocked to safe investments like bonds and household goods makers. The yields on long-term U.S. government bonds are at all-time lows, while metals prices are moving higher. Energy companies are sinking with the price of oil.

ON WALL STREET. At the close, the Dow Jones industrial average had lost 108.8 points, about 0.6 percent, to 17,840.6. The Standard & Poor’s 500 index slipped 14.4 points, about 0.7 percent, to 2,088.6. The Nasdaq composite fell 39.7 points, about 0.8 percent, to 4,822.9.

Bond prices rose. The yield on the 10-year Treasury note dropped to 1.40 percent.

OIL PRICES. Benchmark U.S. crude dropped $2.06 to $46.93 per barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude, used to price international oils, fell $1.84 to $48.26 a barrel.

SPOT OF BOTHER. Financial groups Aviva Investors, Standard Life and M&G Investments stopped trading in commercial property funds after a big increase in investors trying to liquidate their holdings. The firms said they were protecting other investors who wished to remain in their respective funds. The Bank of England said it eased bank rules to allow them to lend up to $200 billion to households and businesses.

The pound fell to $1.3023 from $1.3259 on Tuesday, its lowest since the vote and the weakest in 31 years.

BOND BUYING. Bond prices climbed, sending yields lower. According to Tradeweb, the yield on the 10-year and 30-year Treasury notes reached all-time lows. The yield on the 10-year note dropped to 1.37 percent from 1.45 percent late Friday. At the end of last year the yield traded at 2.30 percent.

ANALYST’S OPINION. “We’ve seen a tremendous rally pretty much every night in longer-term bonds” since the vote, said Tom di Galoma, managing director at Seaport Global Holdings. “There’s just so many unanswered questions both from the legal standpoint, a diplomatic standpoint, an economic standpoint.”

BANKS PREDICAMENT. Lower bond yields translate to lower interest rates, and that hurts bank profits on loans such as mortgages. Citigroup lost $1.57, or 3.7 percent, to $40.60 and Goldman Sachs fell $3.89, or 2.6 percent, to $144.36.

SAFETY. Investors once again looked for safe investments, and the types of stocks that are generally considered the safest all traded higher. Those included household goods companies.

PRECIOUS METALS. Gold rose $19.70, or 1.5 percent, to $1,358.70 an ounce. Silver gained 32 cents, or 1.6 percent, to $19.91 an ounce. Copper lost 3 cents to $2.18 a pound. Gold is at its highest price in more than two years and silver is the highest it’s been since August 2014.

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