U.S. stocks remained lower Wednesday, pressured by worries surrounding Turkey’s currency crisis and continued trade tensions, while a sharp fall in oil prices sent the energy sector skidding.
What are the main benchmarks doing?
The Dow Jones Industrial Average
fell 220 points, or 0.9%, to 25,081, reclaiming the key 25,000 mark. The S&P 500 index
dropped 25 points, or 0.9%, to 2,814. The Nasdaq Composite Index
declined 105 points, or 1.3%, to 7,766.
In Tuesday’s session, major indexes closed solidly higher as selling of Turkey’s currency abated, allowing investors to focus on a healthy domestic economy and strong corporate results.
Read: The stock market is about to make history
What’s driving markets?
Qatar, a country bordering Saudi Arabia, reportedly pledged to invest $15 billion in Turkey following a meeting between Turkish President Recep Tayyip Erodgan and Qatar’s Sheikh Temim bin Hamed Al Sani, Turkish news reports said. The news helped the lira
extend gains against the U.S. dollar, with the Turkish currency up more than 5%. The U.S. dollar index
traded mostly flat in recent action.
But many investors are still worried that Turkey’s crisis could spread and have a negative impact on economies with exposure to the country. While the Turkish economy is relatively small and few U.S. companies have significant direct exposure to it, the situation is seen as adding to the uncertain geopolitical environment, one highlighted by worsening trade relations between the U.S. and its major partners.
Turkey raised tariffs on a number of American products, in the latest escalation in tensions between the two countries. President Donald Trump raised duties on Turkish aluminum and steel last week; the latest tariffs from Turkey are in response to those “conscious attacks,” according to a translation of a tweet posted by Fuat Oktay, the country’s vice president.
Meanwhile, oil futures
slumped after data showed U.S. crude inventories posted a large and unexpected rise last week. The S&P 500 energy sector fell 3.5%.
See: Why Turkey’s crisis doesn’t spell doom for all emerging-market currencies
What data are in focus?
In the latest economic data, retail sales rose 0.5% in July, above expectations. Excluding auto sales, they were up 0.6%, which was also ahead of expectations.
Separately, second-quarter productivity rose 2.9%, the highest rate in more than three years. Output in the second-quarter was up 4.8%. The Empire State manufacturing index rose 3 points to 25.6 in August, the New York Fed said Wednesday, topping expectations for a reading of 20.
What are market experts saying?
“Really, everything today has been playing on the idea of the trade tensions and Turkey. Obviously crude is down today because U.S. stockpiles rose over the last week to their highest level since March 2017,” said Kevin Nicholson, chief market strategist at RiverFront Investment Group.
Nicholson also blamed some of the market’s weakness to the weakness in Tencent Holdings Ltd., often referred to as China’s Google, which is weighing on tech shares.
“You had early reaction to Tencent news and then multiply that by the emerging markets being under pressure and the market are down,” he said.
“I’m not terribly surprised about the U.S. market sell-off. U.S. growth stocks are feeling the pain,” said Will Skeean, investment advisor at Edge Capital Group Partner & Sr., referring to shares of companies that grow at a faster pace than the market’s average.
“It’s also very typical for the markets to look into the past and try to fight the last war. Look at Turkey. Everybody out there has been looking for the other shoe to drop. We’re at the end of summer, there’s season[al] weakness. I’m not surprised we’re seeing a little downturn for the markets,” he said.
“The Turkey issues are relatively new but for guys who have been around for a while like me, it is bringing back haunting memories of the 1997 Thai baht contagion,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research.
Read: ‘If there were ever a moment to harvest gains…it is now,’ warns Guggenheim’s Minerd
What stocks are in focus?
slumped 14% after the department store reported its revenue fell year-on-year even though its adjusted second-quarter earnings beat expectations. It also raised its full-year outlook for both profits and sales.
shares slid 3.1% after Bloomberg reported that Chief Executive Elon Musk hadn’t officially tapped Goldman Sachs Group Inc.
as its financial adviser when he revealed plans last week to take the car maker private and said he had secured funding for the deal.
Helios & Matheson Analytics Inc.
the parent company of MoviePass, sank 6% after it lost millions of dollars in the second quarter as the subscription-movie offering sought to change its rules. The stock had plummeted 100% over the past three months.
Columbia Sportswear Co.
rose 1.1% after Cowen upgraded the stock to outperform and raised its price target by $13 to $103.
U.S.-listed shares of Tencent
skidded 6.8% after the Chinese company reported second-quarter earnings and revenue that missed expectations.
fell 1.8% after the domain names management company priced a public offering of 10.4 million shares at $75.75 a share, below its Tuesday closing price.
Canada-listed Canopy Growth Corp. shares
jumped 31% after liquor seller Constellation Brands Inc.
said it would invest about $4 billion into the cannabis company.
What are other markets doing?
European stocks were weaker across the board while Asian markets were mixed with China, Korea, and Japan down but Malaysia, Indonesia and Australia higher.
slumped more than 1%.
—Ryan Vlastelica contributed to this report
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