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While you were sleeping: Wall St pares losses

Friday 17th June 2016

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Wall Street fluctuated, with equities regained some of their earlier losses, as investors geared up for Britain’s potential exit from the European Union, a fate that hinges on a June 23 referendum.

The murder of Jo Cox, a British member of Parliament, prompted both sides in the UK debate to suspend campaigning for next week’s referendum on the country’s European Union membership. 

In 2.29pm New York trading, the Dow Jones Industrial Average rose 0.23 percent. The Nasdaq Composite Index fell 0.27 percent. In 2.14pm trading, the Standard & Poor’s 500 Index inched 0.01 percent lower.

US Treasuries gave up some of their earlier gains, with the 10-year note yield at 1.57 percent as of 1.45pm in New York. Earlier it fell as low as 1.52 percent.

The Dow rose as gains in Merck, Microsoft and 3M offset falls in Nike, Boeing and Caterpillar.

"They are preparing for the worst on a Brexit vote," Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey, told Reuters. "US companies have spent over US$600 billion over time to make the UK their home and now they don't know what will happen to their investment."

Jo Cox, 41, a lawmaker for the opposition Labour Party and vocal advocate of Britain remaining in the EU, was attacked—police said she had been shot and stabbed—while preparing to meet with constituents in Birstall near Leeds, Reuters reported. 

Europe’s Stoxx 600 Index ended the day with a decline of 0.7 percent from the previous close. The UK’s FTSE 100 index slid 0.3 percent, France’s CAC 40 index retreated 0.5 percent, while Germany’s DAX index dropped 0.6 percent.

“Recent polls have shown Brexit is too close to call, or leaning in the direction of leaving,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott, told Bloomberg. “That campaign cooling a bit could provide relief to investors that think further campaigning will help drive votes in the direction of a Brexit. How sticky of a sentiment that will be is yet to be determined.”

A day after the US Federal Reserve signalled an even-more gradual path for future interest rate increases, a Labor Department report on inflation firmed albeit less than analysts had predicted. The consumer price index rose 0.2 percent last month, following a 0.4 percent increase in April.

Meanwhile, a separate report showed initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 277,000 for the week ended June 11.

"The message from claims continues to be that the April/May payrolls data greatly exaggerated the extent to which the trend in employment growth is weakening,” Jim O’Sullivan, chief US economist at High Frequency Economics, wrote in a note to clients, Bloomberg reported.

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