U.S. stocks plunged at the open on Friday, with the Dow Jones average falling more than 500 points, after Britain’s vote to quit the European Union delivered the biggest blow to the global financial system since the 2008 financial crisis.
Investors worried about the outlook for the world economy sought refuge in the dollar and other safe-harbor assets such as gold and U.S. Treasury bonds, while dumping riskier shares. The yield on the U.S. 10-year bond hit its lowest since 2012.
Banks and tech stocks were among the biggest losers.
The market was already expected to be volatile as traders adjust portfolios to account for an annual reconstitution of the widely followed Russell stock indexes.
“The participants were caught off guard and it showed a touch of complacency in terms of the vote,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago. “The mood is one of humility so far this morning, and certainty I think that of caution.”
At 9:33 a.m. ET (1333 GMT) the Dow Jones industrial average .DJI was down 538.21 points, or 2.99 percent, at 17,472.86, the S&P 500 .SPX was down 54.85 points, or 2.6 percent, at 2,058.47 and the Nasdaq Composite .IXIC was down 177.97 points, or 3.62 percent, at 4,732.08.
The CBOE VIX .VIX volatility index – known as Wall Street’s fear gauge – surged 52.11 percent to 26.24, its highest since February.
Citigroup (C.N) was down 7.4 percent, while Bank of America (BAC.N), JPMorgan (JPM.N) and Goldman Sachs (GS.N) slumped by between 4 and 5 percent. U.S. banks have big London operations.
Trading in S&P 500 and Nasdaq futures was halted briefly overnight after they fell more than 5 percent, triggering limit thresholds.
By 9 a.m. ET (1300 GMT), the number of S&P futures contracts traded had exceeded their daily average for the past year.
Britain’s FTSE 100 stock index was down 3.7 percent in afternoon trading. Asian stocks also tumbled.
Amid the turmoil, sterling hit a 31-year low in its biggest intraday percentage fall on record and Prime Minister David Cameron said he would step down by October.
U.S. short-term interest rate futures rose amid speculation the Federal Reserve could cut interest rates to help shield the economy from any global fallout.
Investors have been waiting for the Fed to raise borrowing costs as the economy improves.
The Federal Reserve, which had earlier said a Brexit could have “significant repercussions” on the economic outlook, sought to calm markets on Friday by saying it was ready to provide dollar liquidity.
Oil prices, which are sensitive to changes in the economic outlook, dropped more than 4 percent, the biggest fall since early February. [O/R] Exxon (XOM.N) and Chevron (CVX.N) were down about 2.5 percent.
Among gold miners, Barrick (ABX.N) was up 5.7 percent and Newmont Mining (NEM.N) was up 6 percent.
Apple (AAPL.O), which got more than a fifth of its revenue from Europe last quarter, was down 2.2 percent.
U.S. stocks had risen in recent sessions as investors bet that Britain would remain part of the EU.
As of Thursday’s close, the S&P 500 index had risen 3 percent since the start of the year.
Declining issues outnumbered advancing ones on the NYSE by 1,514 to 99. On the Nasdaq, 2,417 issues fell and 147 advanced.
The S&P 500 index showed two new 52-week highs and six new lows, while the Nasdaq recorded eight new highs and 66 new lows.
(Additional reporting by Noel Randewich; Editing by Alison Williams and Ted Kerr)
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