By Ellie Ismailidou and William Watts, MarketWatch

Both sides in Brexit campaign suspend activity after U.K. lawmaker's death

U.S. stocks erased early losses to close modestly higher on Thursday, ending a five-day streak of losses.

For the past several sessions, a British referendum scheduled for June 23 to decide whether the U.K. will remain in the European Union had been weighing on risky assets like equities.

On Thursday, stocks seemed to find some support after both sides in the referendum debate suspended campaigning for the day after British lawmaker Jo Cox died following a shooting attack. The British pound bounced on speculation the development could bolster the "remain" campaign (http://www.marketwatch.com/story/pound-us-stocks-rebound-after-brexit-campaigns-suspended-2016-06-16).

But analysts played down the impact on U.S. stocks, noting the modest rebound came as equities ended a five-day losing streak. The bounce marks "a temporary respite in what is otherwise a risk-off day," said Art Hogan, chief market strategist at Wunderlich Securities.

The S&P 500 closed 6.50 points, or 0.3%, higher at 2,078, after trading as low as 2,050.27 earlier in the session. Nine out of the S&P's 10 sectors ended in positive territory, with telecom stocks leading the gains, up 0.8%.

The Dow Jones Industrial Average erased a triple-digit loss to close with a gain of 92.93 points, or 0.5%, at 17,733.10, led by a 2.5% gain in Merck & Co. Inc.(MRK).

The Nasdaq Composite ended the session up 9.98 points, or 0.2%, at 4,844.91.

The main indexes advanced even as oil futures dropped to a five-week low, weighing on energy stocks, which was the only sector on the S&P that closed in negative territory, down 0.2%.

Meanwhile, the financial sector was hit earlier in the day by the prospect of interest rates staying lower for longer, after the Fed signaled Wednesday that it will delay interest rate increases (http://www.marketwatch.com/story/downgraded-dot-plot-hints-at-longer-term-fed-worries-on-economy-2016-06-15), demonstrating it's not overly confident in the economy.

Through most of the session, the market had been caught in risk-off mode, analysts said, with risk assets like equities and oil selling off world-wide, while havens like gold, the yen and government bonds rallied.

The S&P remained Thursday within "a sizable trading range from the last two months," marked roughly between 2,025 and 2,120, said Frank Cappelleri, technical analyst at Instinet.

But the question now becomes whether the index can use this extended period of sideways movement as a "high-level launching pad to new highs." According to Cappelleri, a positive sign for this scenario would be if the S&P holds near 2,100 even after next week's Brexit referendum.

But investors across the world were fretting about the potential consequences of a Brexit vote, particularly after three major central banks--the Federal Reserve, the Bank of England and the Bank of Japan--raised concerns about the U.K. potentially leaving the EU in the June 23 referendum.

"If we get through it and there's a 'remain' vote, we will have a pretty quick risk-on rally" next week, with investors selling bonds and buying stocks, allowing for at least a partial retracement of the selloff, Hogan said. "If this is a 'leave' vote, we have no road map for what happens next."

Meanwhile, the Japanese central bank on Thursday made no changes to its asset-purchase program or interest rates. The lack of action was interpreted as caution ahead of the June 23 Brexit referendum.

Read:Brexit fears lead Bank of Japan to leave rates unchanged (http://www.marketwatch.com/story/brexit-fears-lead-bank-of-japan-to-leave-rates-unchanged-2016-06-15)

Asian markets slumped (http://www.marketwatch.com/story/asian-markets-down-after-bank-of-japan-stays-pat-2016-06-15) after the BOJ decision, while the yen rallied, reaching a two-year high against the dollar. (http://www.marketwatch.com/story/yen-soars-to-multi-month-highs-vs-dollar-euro-after-boj-holds-fire-2016-06-16)

On Thursday, the Bank of England also kept its key interest rate unchanged (http://www.marketwatch.com/story/bank-of-england-holds-key-rate-at-05-ahead-of-brexit-referendum-2016-06-16) at a record low of 0.5% and made no changes to its 375-billion-pound ($530 billion) asset-purchase program. The BOE said in a statement that a potential vote to leave the EU could materially alter the outlook for output and inflation in the U.K.

Other economic news: On the U.S. economic front, a flurry of fresh data offered a mixed picture of the U.S. economy.

A reading on U.S. inflation missed expectations (http://www.marketwatch.com/story/us-inflation-climb-02-in-may-cpi-shows-2016-06-16) on Thursday, while initial jobless claims rose (http://www.marketwatch.com/story/jobless-claims-rise-13000-to-277000-2016-06-16). But rent rose at the fastest monthly pace since 2007 (http://www.marketwatch.com/story/rent-rose-at-the-fastest-pace-in-more-than-9-years-in-may-2016-06-16)last month, a reminder that one of the biggest expenses for most Americans isn't easing up.

The Philadelphia Fed manufacturing index (http://www.marketwatch.com/story/philly-fed-survey-shows-mild-improvement-in-june-2016-06-16)showed mild improvement in June, logging its second positive reading in the past 10 months. And a closely watched index of home builder sentiment (http://www.marketwatch.com/story/home-builder-sentiment-jumps-2-points-in-may-nahb-says-2016-06-16) rose to its highest reading since January.

Movers & shakers: Drugstore chain Rite Aid Corp.(RAD) fell 0.1% after the company reported a quarterly loss Thursday, missing expectations (http://www.marketwatch.com/story/rite-aid-misses-profit-sales-expectations-2016-06-16) on profit and sales.

Jabil Circuit Inc. (JBL) erased early losses scored after the Apple Inc. (AAPL) supplier late Wednesday released a weak outlook (http://www.marketwatch.com/story/jabil-shares-volatile-on-weak-fourth-quarter-outlook-2016-06-15) for the fourth quarter, rising 1.9%.

Airbnb Inc. has signed a $1 billion debt facility deal (http://www.marketwatch.com/story/airbnb-secures-1-billion-debt-deal-to-fund-new-services-2016-06-16) with a group of large U.S. banks, Bloomberg reported Thursday, citing people familiar with the matter. The home-rental company is not a publicly traded company.

Other markets: European markets ended lower (http://www.marketwatch.com/story/european-stocks-fall-as-worries-about-growth-brexit-weigh-2016-06-16). The dollar was mostly higher against other major currencies, but slid against the yen.

--Sara Sjolin contributed to this report.

 

(END) Dow Jones Newswires

June 16, 2016 16:53 ET (20:53 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
Merck (NYSE:MRK)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Merck Charts.
Merck (NYSE:MRK)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Merck Charts.