(task) Wall St. slumps as Brexit takes investors by surprise | Reuters

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> http://www.reuters.com/article/us-usa-stocks-idUSKCN0Z918E <http://www.reuters.com/article/us-usa-stocks-idUSKCN0Z918E>
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> Wall St. slumps as Brexit takes investors by surprise | Reuters
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> U.S. stocks fell sharply on Friday, with the Dow Jones industrial average dropping as much as 538 points, as Britain's vote to quit the European Union sent a shock wave through global financial markets.
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> The S&P 500 index and Dow were on track for their biggest one-day percentage drop since September, while the Nasdaq composite index was headed for its worst day since August. All three indexes were set for their second weekly decline in a row.
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> Global financial markets plunged and sterling sank to its lowest since 1985 after Britons voted by about 52-48 percent to break away from the world's biggest trading bloc.
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> "A lot of investors and market participants were not anticipating this outcome," said David Lefkowitz, senior equity strategist at U.S. Bank Wealth Management Americas in New York.
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> At 13:47 a.m. ET the Dow .DJI </finance/markets/index?symbol=us%21dji> was down 509.31 points, or 2.83 percent, at 17,501.76, the S&P .SPX </finance/markets/index?symbol=us%21spx> was down 63.32 points, or 3 percent, at 2,050 and the Nasdaq Composite .IXIC </finance/markets/index?symbol=us%21comp> was down 180.39 points, or 3.67 percent, at 4,729.65.
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> If the Nasdaq closes down by more than 179.79 points, it would be its biggest one-day points drop since September 2008, at the start of the financial crisis.
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> Investors worried about the outlook for the world economy sought refuge in the dollar and other traditional safe-harbor assets such as gold and U.S. Treasury bonds, while dumping riskier shares. The yield on the U.S. 10-year T-bond hit its lowest since 2012.
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> Banks stocks, which had risen strongly this week in anticipation that Britain would stay in the EU, were among the biggest losers.
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> The financial index .SPSY fell 4.74 percent, leading sector decliners, and was set for its worst day in 10 months.
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> Citigroup (C.N </finance/stocks/overview?symbol=C.N>) was down 8.4 percent and Morgan Stanley (MS.N </finance/stocks/overview?symbol=MS.N>) 9.6 percent, while Bank of America (BAC.N </finance/stocks/overview?symbol=BAC.N>), JPMorgan (JPM.N </finance/stocks/overview?symbol=JPM.N>) and Goldman Sachs (GS.N </finance/stocks/overview?symbol=GS.N>) dropped by between 6 and 7 percent. U.S. banks have big London operations.
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> Nine of the 10 major S&P 500 sectors were lower. Only the utilities sector .SPLRCU managed to eke out a gain. Utilities are traditionally seen as a safe investment.
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> Shares of the biggest U.S. tobacco companies also rose, as investors sought stocks offering high yields. Altria Group (MO.N </finance/stocks/overview?symbol=MO.N>), the largest U.S. cigarette maker, was up 2.3 percent at $67.85 after hitting a record high of $67.97.
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> The CBOE VIX .VIX volatility index - known as Wall Street's fear gauge - was up 35.3 percent at 23.34 in afternoon trading. The index had earlier surged as much as 52.11 percent to 26.24, its highest since February.
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> The market was already expected to be volatile on Friday as traders adjust portfolios to account for an annual reconstitution of the widely followed Russell stock indexes.
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> About 6.94 billion shares had changed hands on U.S. exchanges by 01:36 p.m. ET, according to Thomson Reuters data. By that time, volume was roughly 1.6 times the normal pace of the last 22 sessions, according to Trade Alert data.
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> "We're going to have to wait out 36 or 72 hours before making a final judgment on what the outcome of the referendum means for the market," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
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> The number of S&P futures contracts traded by 9 a.m. ET had already exceeded their daily average for the past year. Trading in S&P 500 and Nasdaq futures was halted briefly overnight after they fell more than 5 percent, triggering limit thresholds.
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> Britain's FTSE 100 stock index closed down 3.2 percent after dropping as much as 8.7 percent. Asian stocks also tumbled.
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> 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.
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> Investors have been waiting for the Fed to raise borrowing costs as the economy improves.
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> 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.
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> Oil prices, which are sensitive to changes in the economic outlook, dropped about 4.4 percent, the biggest fall since early February. [O/R] Exxon (XOM.N </finance/stocks/overview?symbol=XOM.N>) and Chevron (CVX.N </finance/stocks/overview?symbol=CVX.N>) were down about 1.7 percent.
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> Among gold miners, Barrick (ABX.N </finance/stocks/overview?symbol=ABX.N>) was up 5.7 percent and Newmont Mining (NEM.N </finance/stocks/overview?symbol=NEM.N>) was up 5.1 percent.
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> Apple (AAPL.O </finance/stocks/overview?symbol=AAPL.O>), which got more than a fifth of its revenue from Europe last quarter, was down 2.5 percent.
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> Declining issues outnumbered advancing ones on the NYSE by 2,575 to 480. On the Nasdaq, 2,465 issues fell and 393 advanced.
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> The S&P 500 index showed 27 new 52-week highs and nine new lows, while the Nasdaq recorded 23 new highs and 96 new lows.
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> (Additional reporting by Noel Randewich and Saqib Iqbal Ahmed; Editing by Ted Kerr)