U.S. stocks traded sharply lower Friday, reversing recent gains in a global risk-off trade after Britain surprised markets by voting to leave the European Union.
The Dow Jones industrial average briefly fell more than 500 points in morning trade, with Goldman Sachs contributing the most to declines as nearly all constituents traded lower. Verizon was the only positive component.
The S&P 500 extended opening losses to decline more than 2.5 percent lower in morning trade. Financials fell more than 4 percent to lead all 10 sectors lower.
The S&P 500 opened 1.88 percent lower in 1986, according to Howard Silverblatt of S&P Dow Jones Indices.
Ahead of the U.S. stock market open, pound sterling held off session lows near $1.37 against the dollar. Earlier, sterling hit $1.3224, its lowest since 1985.
“The biggest thing is markets are operating and there isn’t a liquidity crisis. This isn’t a Lehman moment,” said Chris Gaffney, president, EverBank World Markets.
“I think investors mispriced the risk and quickly repriced it,” he said. “That’s what we’re seeing now, the repricing of risk with heightened uncertainty.”
U.S. stocks surged into the close Thursday amid increasing expectations that Britain would vote to stay in the European Union. As of the close Thursday, the major U.S. stock indexes were tracking for weekly gains of nearly 2 percent or more.
The vote results released overnight showed the leave camp secured 51.9 percent versus 48.1 percent for remain.
Global stocks plunged, with the Nikkei 225 falling nearly 8 percent and the German DAX trading 6.5 percent lower.
The STOXX Europe 600 Banks index traded more than 14 percent lower to more than 40 percent below its 52-week intraday high. The worst day for the index in history going back to 1987 was a 10.39 percent decline in October 2008.
Treasury yields fell sharply. 10-year U.S. Treasury note yields hit a low of 1.406 percent, its lowest since July 26, 2012. The yield recovered to near 1.49 percent as of 6:57 a.m. ET.
The 2-year yield hit a low of 0.499 percent, its lowest level since April 17, 2015.
The German 10-year bund yield fell back into negative territory.
Gold hit its highest in more than 2 years and was last near $1,330 an ounce.
In morning trade, the Dow Jones industrial average declined 470 points, or 2.6 percent, to 17,544, with Goldman Sachs leading decliners.
The S&P 500 declined 54 points, or 2.5 percent, to 2,058, with financials leading all sectors lower.
The Nasdaq composite declined 154 points, or 3.15 percent, to 4,756.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 23.
About 24 stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 129 million and a composite volume of 456 million in morning trade.
U.S. crude oil futures for August delivery declined $2.14 to $47.97 a barrel on the New York Mercantile Exchange.
Gold futures for August delivery surged $63.80 to $1,326.90 an ounce.
On tap this week:
10 a.m. Consumer sentiment
*Planner subject to change.