Investing.com - The Dow fell sharply Friday on fears a rout of the Turkish lira could have an overarching impact on the global economy.
The Dow Jones Industrial Average fell about 0.77%. The S&P 500 fell 0.71%, while the Nasdaq Composite fell about 0.67%.
The lira dropped to a record low against the dollar after President Donald Trump doubled metals tariffs on Turkey, exacerbating investor concerns about Turkey's ability to pay its debts.
That left many fearing the fallout could spread beyond Turkey's border, prompting traders to abandon riskier assets like stocks in search of safe-havens like gold, yen and Treasuries.
Volatility, as measured by the so-called fear index VIX, rose nearly 17%, underlying investor concerns about the broader impact of a possible crash in Turkey's economy.
The exposure to a slump in Turkey's economy is "pretty international," though limited to the banking sector, said Tim Ash, a senior EM strategist at Bluebay Asset Management.
Data from the Bank for International Settlements showed that Japanese banks are owed $14 billion, U.K. lenders $19.2 billion and the United States about $18 billion.
Shares of JPMorgan Chase (NYSE:JPM) fell 0.98%, Goldman Sachs (NYSE:GS) fell 1.78% and Morgan Stanley (NYSE:MS) fell 2.12%, dragging financials lower and weighing on the major averages.
Corporate earnings, which have mostly offset geopolitical uncertainty amid ongoing concerns about an escalating U.S.-China trade war, added little support to sentiment on equities.
Dropbox (NASDAQ:DBX) stock closed down nearly 10%, despite posting better-than-expected revenue and earnings a day earlier as investors digested news that Chief Operating Officer Dennis Woodside was stepping down.
Overstock.com (NASDAQ:OSTK) stock closed nearly 8% higher, shrugging off its wider-than-expected quarterly loss as the company revealed a private equity firm had bought a stake in the company.
Energy was the sole sector to close above breakeven as oil prices settled higher Friday on expectations for both a rebound in oil demand growth and steeper losses of Iranian crude from the market.
On the New York Mercantile Exchange, crude futures for September rose 82 cents to settle at $67.63 a barrel,
Economic data, meanwhile, showing upbeat consumer inflation and reaffirming investor expectations for the Federal Reserve to hike rates twice more this year, did little to lift stocks.
The Labor Department said on Friday its consumer price index rose 0.2% last month and core CPI rose 2.4%, beating economists' estimates.
Top Dow Gainers and Losers Today:
Walmart (NYSE:WMT), Chevron (NYSE:CVX) and Walgreens (NASDAQ:WBA) were among the top Dow gainers for the session.
Intel (NASDAQ:INTC), Caterpillar (NYSE:CAT) and DowDuPont (NYSE:DWDP) were among the worst Dow performers of the session.