US stocks closed lower on Monday as weaker oil prices, worries over a possible UK Brexit vote and anxieties ahead of the Federal Reserve rate meeting midweek, unsettled the bourse.
Although few pundits expect US rates to be hiked this month, regional central bankers have been calling out for a hike and no one wants to be remembered for missing the risk.
Britain votes on whether to stay or quit the European Union on June 23 and the “Leave” camp have maintained a recent lead, not seen since February.
US oil benchmark WTI ended down 0.4% at $48.88, depressing stocks.
The S&P 500 index ended down 0.8% at 2,079, while the S&P Midcap 400 lost a heavy 1.1% to 1,482 and the S&P Smallcap 600 was down 1.2% at 704.
If there were some positives they included social network LinkedIn (NYSE:LNKD) which rose more than 46% to $192.21 after Microsoft (NASDAQ:MSFT) swooped to snap it up in a $26bn cash deal. However, ratings agency Moody’s said it placed Microsoft Corp's 'AAA' credit rating under review for downgrade following the software giant's deal to buy LinkedIn Corp, citing concerns that it would be funded through new debt.
Microsoft and Johnson & Johnson (NYSE:JNJ) are the only two companies left with a credit rating higher than that of the US government – namely AAA.
Midsession
US stocks as a whole fell at midsession on Monday as oil prices slid again, but there were some notable bourse gainers too.
The S&P 500 fell 0.5% to 2,085, while the S&P Midcap 400 lost 0.6% to 1,490 and the S&P Smallcap 600 was down 0.8% to 707.
The US oil benchmark WTI was down 0.8% at $48.68 as last week’s $51-plus levels, the highest since July, looked more elusive.
But it wasn’t only oil that weighed on investors’ minds. This week’s Federal Open Market Committee meeting to determine US interest rates as well as the prospect of Britain exiting the European Union also played their parts in a sombre session, just as the so-called “Brexit” affected the London Stock Exchange close earlier.
The biggest midcap decliner was Sotheby’s Holdings (NYSE:BID), down 7.6% at $29.45, while the small-caps equivalent was last week’s star gainer, the advertising agency Harte-Hanks (NYSE:HHS) on profit-taking.
Open
Microsoft Corporation’s (NASDAQ:MSFT) blockbuster $26bn bid for recruitment-focused social network Linked Corp (NYSE:LNKD) dominated the early going on Wall Street.
The “A” class shares of LinkedIn soared 47% to $192.81 as the Seattle-based office software dinosaur won over the board with a cash offer of $196 per share. Social media network Twitter, Inc (NYSE:TWTR) rose 9% in sympathy to $1.27.
The big deal did not stop US blue-chips from opening lower, infected by fears from across the pond over the potential disruption should Great Britain vote to quit the European Union, but stocks have since picked up, with the Dow Jones 17 points to the good at 17,883 and the broader-based S&P 500 a smidgen higher at 2,096.
The Nasdaq Composite, however, remained in the red, weighed down by Microsoft’s 2.6% decline.
The mid-cap index, the S&P 400, was also in the red, shedding just over half a point at 1,498. The small caps measure, the Russell 2,000 index, was just under a point firmer at 1,165.
Rivalling LinkedIn for stock of the day was Eleven Biotherapeutics, Inc (NASDAQ:EBIO), after it signed a licensing deal with multi-national drugs giant Roche.
The US biopharmaceutical company, which is focused on discovering and developing protein therapeutics to treat diseases of the eye, has agreed to grant an exclusive, worldwide licence to Roche to develop and commercialise EBI-031, for the treatment of diabetic macular edema, and uveitis.
Shares in Eleven rose 50% to $2.81.