Stocks fall as Turkey’s currency crisis underlines global risks

U.S. stocks fell in early trading on Friday, tracking a global equity retreat fueled by the mounting currency crisis in Turkey, which raised the alarm for possible contagion into other markets.

The U.S. dollar DXY, +0.65%  viewed as a haven relative to other currencies, muscled to its firmest level in nearly a year against major rivals.

What are early indications showing?

The Dow Jones Industrial Average DJIA, -0.89% fell 164 points, or 0.6%, to 25,349. The S&P 500 SPX, -0.14% lost 14 points to 2,839, a decline of 0.5%. The Nasdaq Composite Index COMP, -0.74% was off 39 points to 7,853, a decline of 0.5% that put it on track to snap an eight-day winning streak.

The day’s decline took both the Dow and the S&P negative for the week, with the blue-chip average off 0.6% and the S&P down 0.1%. The Nasdaq is up 0.5% on the week.

What’s driving the market?

The U.S. dollar surged nearly 20% against the Turkish lira USDTRY, +17.6217% According to FactSet data, the lira is down 23% this week, bringing its year-to-date decline to more than 42%.

The move that comes after the European Central Bank expressed concern about the country, where President Recep Tayyip Erdogan was re-elected in a snap vote in June and whose growing power has raised questions about the independence of the country’s central bank.

The lira’s decline prompted U.S. President Donald Trump to announce a doubling of U.S. tariffs on certain Turkish goods.

The iShares MSCI Turkey ETF TUR, -17.60%  plummeted 20%, extending its year-to-date decline to 54%.

While U.S. companies have limited direct exposure to the country, the lira’s decline was the latest sign of turmoil in international economies, particularly emerging markets. As such, it added to the cautious tone in the equity market, particularly as both

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