US stocks slid on Friday as a deepening economic crisis in Turkey dragged on bank shares and triggered a move out of riskier assets.
The Dow and S&P 500 posted declines for the week following five straight weeks of gains, but the S&P 500 remains just 1.4 per cent below its record high from January 26.
A drop in technology shares added to the day’s bearish tone. The S&P technology index fell 0.8 per cent, with Intel down 2.6 per cent after Goldman Sachs downgraded the stock to ‘sell.’
Microchip Technology shares fell 10.9 per cent after a disappointing second-quarter revenue forecast.
A slump in the Turkish lira worsened after US President Donald Trump doubled tariffs on steel and aluminum imported from the country.
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Investors fled to safe-haven assets, pushing the dollar higher and weighing on US bond yields.
‘It was a classic risk-off move,’ said Quincy Krosby, chief market strategist at Prudential Financial in New Jersey. ‘You worry about the collateral damage. You worry about the effects on Europe. You have banks losing because the 10-year US Treasury (yield) came down.’
The S&P financial index fell 1.2 per cent, among the biggest drags on the S&P 500.
The Dow Jones Industrial Average fell 196.09 points, or 0.77 per cent, to 25,313.14, the S&P 500 lost 20.3 points, or 0.71 per cent, to 2,833.28 and the Nasdaq Composite dropped 52.67 points, or 0.67 per cent, to 7,839.11.
For the week, the Dow fell 0.6 per cent and the S&P 500 dipped 0.3 per cent. The Nasdaq gained 0.3 per cent for the week after strong gains in some technology shares.
Citigroup, the most global of the major US banks, fell 2.4 per cent. JPMorgan, Wells Fargo and Bank of America were also lower.
‘Any time that there’s any movement in currencies, financials tend to reap the contagion risks,’ said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.
Shares of trade-sensitive companies also declined, including Boeing, 3M and Caterpillar, which were all down at least one per cent.
Tesla shares ended up 0.9 per cent. The number of Tesla shares sold short rebounded and are now higher than before Chief Executive Elon Musk on Tuesday proposed taking the electric car maker private, according to data from financial technology and analytics firm S3 Partners.
Data on Friday showed US consumer prices rose in July and the underlying trend continued to strengthen, pointing to a steady increase in inflation pressures.