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

NEW YORK – Commodity producers and lenders led U.S. stocks lower, as the S&P 500 Index snapped its longest winning streak in three months, after comments from Bank of England Gov. Mark Carney rekindled concerns that Britain’s exit from the European Union will further weigh on tepid global growth.

Energy and financial shares were among the biggest losers Tuesday, with investors showing a preference for havens as equity declines and higher volatility reflected some of the anxiety seen during the two-day selloff following the Brexit vote. The BOE’s Carney warned of prospects for “a material slowing of the economy,” amid developing risks from the decision to leave the EU.

The S&P 500 Index fell 0.7 percent to 2,088.32 at 4 p.m. in New York, its first retreat in five sessions. The gauge dropped as much as 1.1 percent before trimming losses in the final hour of trading.

“The factors driving the market today are fears of financial contagion coming out of European banks, the drop in oil prices and currency weakness,” said Michael Sheldon, chief investment officer of Northstar Wealth Partners, which oversees $1.1 billion in West Hartford, Conn. “Investors came back after the long weekend and decided that maybe the run-up in prices following Brexit may have been overdone to the upside.”

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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 has tempered Tuesday amid concern over the health of the global economy, and whether efforts by policy makers will be enough to bolster growth.

While the U.S. 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.

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 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 bounced after its biggest-ever weekly drop.

“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.”

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.

Since the Brexit 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. Fed Bank of New York President William Dudley said Tuesday “it’s still really early days to understand what kind of consequences” the referendum will have.

“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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