WASHINGTON (REUTERS) - The US stocks plunged at the open on Friday (June 24), with the Dow Jones average falling more than 500 points, after Britain's vote to quit the European Union delivered the biggest blow to the global financial system since the 2008 financial crisis.
Investors worried about the outlook for the world economy sought refuge in the dollar and other safe-harbour assets such as gold and US Treasury bonds, while dumping riskier shares. The yield on the US 10-year bond hit its lowest since 2012.
Banks and tech stocks were among the biggest losers.
The market was already expected to be volatile as traders adjust portfolios to account for an annual reconstitution of the widely followed Russell stock indexes.
"The participants were caught off guard and it showed a touch of complacency in terms of the vote," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago. "The mood is one of humility so far this morning, and certainty I think that of caution."
At 9.33 am ET (9.33 pm Singapore time) the Dow Jones industrial average was down 538.21 points, or 2.99 per cent, at 17,472.86, the S&P 500 was down 54.85 points, or 2.6 per cent, at 2,058.47 and the Nasdaq Composite was down 177.97 points, or 3.62 per cent, at 4,732.08.
The CBOE VIX volatility index - known as Wall Street's fear gauge - surged 52.11 per cent to 26.24, its highest since February.
Citigroup was down 7.4 per cent, while Bank of America , JPMorgan and Goldman Sachs slumped by between 4 and 5 per cent. U.S. banks have big London operations.
Trading in S&P 500 and Nasdaq futures was halted briefly overnight after they fell more than 5 per cent, triggering limit thresholds.
By 9 am ET, the number of S&P futures contracts traded had exceeded their daily average for the past year. Britain's FTSE 100 stock index was down 3.7 per cent in afternoon trading. Asian stocks also tumbled.
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.
Investors have been waiting for the Fed to raise borrowing costs as the economy improves.
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.