U.S. stocks slip as investors refocus on global growth outlook

NEW YORK – U.S. stocks slipped, tracking declines in European markets amid simmering concerns that the United Kingdom’s exit from the European Union will further weigh on tepid global growth.

Commodity and financial shares, which had led this year’s recovery from 22-month lows in February, were the biggest losers Tuesday as investors shied away from riskier assets. ConocoPhillips dropped 3.6 percent and Freeport-McMoRan Inc. slid 6.6 percent. Banks retreated for a second session, with JPMorgan Chase & Co. and Goldman Sachs Group Inc. slumping at least 2.4 percent.

The S&P 500 Index fell 0.7 percent to 2,089.00 at 10:37 a.m. in New York, its first retreat in five sessions. The Dow Jones Industrial Average lost 95.84 points, or 0.5 percent, to 17,853.53. The Nasdaq Composite Index decreased 0.8 percent. West Texas Intermediate crude futures declined 4 percent.

“The market should not have rebounded, in our view, the way it did last week in the aftermath of Brexit,” said Phil Orlando, who helps oversee $360 billion as chief equity-market strategist at Federated Investors Inc. in New York. “What we saw in the last four days was a reversal of the normal knee-jerk reaction. The market is just saying, ‘June 23 didn’t exist, everything is back to normal, and we’re just going to ignore all of the economic repercussions.’ I think that’s foolish.”

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Equities pulled back after capping on Friday their strongest weekly advance since November, spurred by assurances that central bankers are prepared to loosen monetary policy to counter fallout from the Brexit vote. Investors sense of relief is tempering today amid concern over the health of the economy, and whether efforts by policy makers will be enough to bolster growth.

While the U.S. equity market was shut on Monday in observance of Independence Day, European stocks dropped, and the MSCI All-Country World Index slid on Tuesday for the first time in more than a week amid a retreat in commodities. Bank of England Gov. Mark Carney pledged Tuesday to shore up financial stability as he warned that the risks from Britain’s EU decision are developing.

The S&P 500’s four-day rebound last week, its longest winning streak since March, nearly wiped out its losses stemming from the U.K. vote. The gauge had climbed within 1 percent of a record just before the referendum’s result, and then lost 5.3 percent in its worst two-day rout in 10 months. With Tuesday’s declines, a measure of turbulence rebounded after its biggest-ever weekly drop. The CBOE Volatility Index rose 9.3 percent to 16.14, after the gauge known as the VIX tumbled 43 percent last week.

Investors also face a looming earnings reporting season, which gets underway next week, with analysts predicting a decline of 5.4 percent for companies in the S&P 500. That would mark a fifth consecutive quarterly drop, the longest streak since 2009. Weaker-than-forecast results in the first three months of the year from tech giants including Microsoft Corp. and Apple Inc. had a hand in halting a rally in April as the S&P 500 neared its all-time high.

The main U.S. equity benchmark ended last week 0.5 percent below its level before the Brexit outcome. Since the vote, traders have pushed back their bets for a Federal Reserve interest-rate increase, pricing in a less than 50 percent chance of higher borrowing costs before 2018. New York Fed President William Dudley is scheduled to speak this afternoon. Data today showed factory orders fell more than estimated in May, while durable goods orders declined 2.3 percent after rising 3.2 percent in April.

“People are concerned about global growth,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva, which oversees 34 billion Swiss francs ($35 billion) in assets. “We have the Brexit problem, the general growth and U.S. isn’t in an excellent shape either.”

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