NEW YORK: Stocks are skidding on Wall Street Friday, following even sharper drops in Europe, as investors worried about the financial stability of Turkey. The Turkish lira nosedived again following concerns about the country’s economic policies and higher tariffs from the U.S.
European banks are taking some of the worst losses. Seeking safety, investors are buying U.S. dollars and government bonds. The rising dollar helped U.S-focused companies but hurt big exporters. Rising bond prices are sending interest rates lower, hurting banks.
KEEPING SCORE: The S&P 500 index slid 25 points, or 0.9 percent, to 2,828 as of 2:40 p.m. Eastern time. That wiped out the S&P’s gains from earlier this week.
The Dow Jones Industrial Average dropped 264 points, or 1 percent, to 25,245. The Nasdaq composite, which has risen for eight days in a row, sank 65 points, or 0.8 percent, to 7,826.
The Russell 2000 index of smaller-company stocks took a smaller loss of 2 points, or 0.2 percent, to 1,688. The companies in that index are less reliant on exports, and the stronger dollar makes their imports less costly.
TURKEY: The Turkish lira dropped again and is now down 40 percent this year against the dollar. The weakening lira has been pushing up the cost of goods for Turkish people and shaken international investors’ confidence in the country.
Investors are worried about Turkish President Recep Tayyip Erdogan’s unorthodox economic views. Erdogan says higher interest rates lead to higher inflation, the opposite of what standard economic theory says. As a result he’s pushed Turkey’s central bank to keep interest rates low, threatening its independence.
U.S. President Donald Trump said Friday he will authorize the government to double a tariff on steel and aluminum imported from Turkey. The U.S. sanctioned Turkey, a longtime ally, after it arrested an American