Stocks Slide, Bonds Surge

Stocks Slide, Bonds Surge

NEW YORK (AP) -- U.S. stocks are falling Tuesday morning as investors worry about the British financial system. Investors continue to buy bonds as they worry about the state of the global economy, pushing the yields on long-term U.S. government bonds even lower. Banks are taking the largest losses, and energy companies are sinking with the price of oil.

KEEPING SCORE: The Dow Jones industrial average fell 115 points, or 0.6 percent, to 17,834 as of 11:55 a.m. Eastern time. The Standard & Poor's 500 index slipped 16 points, or 0.8 percent, to 2,086. The Nasdaq composite lost 49 points, or 1 percent, to 4,813. The market is coming off its best week since November, and U.S. markets were closed Monday for the Independence Day holiday.

UK JITTERS: Financial group Standard Life stopped trading in a commercial property fund after a rapid increase in investors trying to liquidate their holdings. That hurt real estate stocks in Britain and reawakened concerns that the exit from the EU could destabilize the country's financial system or economy. The Bank of England later said it had eased bank rules to allow them to lend up to 150 billion pounds ($200 billion) more to households and businesses.

The pound fell to $1.3043 from $1.3259 on Tuesday, its lowest since the vote and the weakest in 31 years.

BOND BUYING: Bond prices climbed, sending yields lower. The yield on the 10-year Treasury note dropped to 1.37 percent from 1.45 percent late Friday. That's extremely low by historical standards. At the end of last year the yield traded at 2.30 percent.

THE QUOTE: "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: Lower bond yields translate to lower interest rates, and that hurts bank profits on loans such as mortgages. Citigroup lost $1.22, or 2.9 percent, to $40.95 and Goldman Sachs fell $3.78, or 2.5 percent, to $144.47. Capital One gave up $1.90, or 3 percent, to $61.06.

ENERGY: Benchmark U.S. crude sank $2.23, or 4.6 percent, to $46.76 a barrel in New York. Brent crude, used to price international oils, fell $2.21, or 4.4 percent, to $47.89 a barrel in London. That pulled energy companies lower. Halliburton shed $1.95, or 4.3 percent, to $43.61 and Schlumberger retreated $2.10, or 2.6 percent, to $77.42.

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. Coca-Cola added 48 cents, or 1.1 percent, to $45.60 and Walgreens Boots Alliance rose 89 cents, or 1.1 percent, to $83.95. Clorox picked up $2.47, or 1.8 percent, to $139.63. Also rising were phone and utility companies. Verizon gained 46 cents to $46.69, and Con Edison rose 95 cents, or 1.2 percent, to $81.46.

GORES GRABS A SNACK: A majority stake in Hostess Brands, the company that makes Twinkies and Ding Dongs, is being acquired by Gores Holdings. Gores will pay $375 million in cash and commit another $350 million in the deal. Hostess filed for Chapter 11 bankruptcy protection four years ago. Gores Holdings is an acquisition company run by the private equity firm Gores Group. The holding company's stock added 24 cents, or 2.5 percent, to $10.02.

PRECIOUS METALS: The price of gold rose $8 to $1,347 an ounce and silver added 16 cents to $19.75 an ounce.

HERE WE GO AGAIN: Stocks took a steep two-day plunge last month after Britain voted to leave the European Union last month. Over the last four days they recovered almost all of the ground they lost after the vote. Tuesday's skid shows investors haven't put all of their worries behind them.

OVERSEAS: Outside the U.S., stock indexes were mostly lower. France's CAC 40 fell 1.8 percent and Germany's DAX lost 2 percent. However Britain's FTSE 100 picked up 0.4 percent. Japan's benchmark Nikkei 225 slipped 0.7 percent to finish and South Korea's Kospi fell 0.3 percent. Hong Kong's Hang Seng dipped 1.4 percent.

EUROPE ECONOMY: A survey showed that business activity in the eurozone slowed to a 17-month low in June. That was before the British vote to leave the EU. Economists said the drop reflects some uncertainty as the vote approached, but it's also likely to drop in coming months as a result of the vote's outcome.

OTHER CURRENCIES: The dollar fell to 101.65 yen from 102.58 yen. The euro slid to $1.1097 from $1.1125.

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