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Concerns About Turkey Weighing On Wall Street - U.S. Commentary


Following the lackluster performance seen over the two previous sessions, stocks have moved mostly lower in morning trading on Friday. The major averages have all moved to the downside after closing mixed for two straight days.

Currently, the major averages are firmly in negative territory. The Dow is down 194.20 points or 0.8 percent at 25,315.03, the Nasdaq is down 30.96 points or 0.4 percent at 7,860.82 and the S&P 500 is down 15.16 points or 0.5 percent at 2,838.42.

The weakness on Wall Street amid concerns about rising tensions over the U.S. and Turkey due to the Turkish detention of U.S. pastor Andrew Brunson.

The Turkish lira has shown a sharp decline to a record low, contributing to considerable weakness in the overseas markets.

In response, Turkish President Recep Erdogan has urged Turks to sell dollars and gold and buy the lira.

"There are various campaigns being carried out. Don't heed them," Erdogan said. "Don't forget, if they have their dollars, we have our people, our God."

President Donald Trump subsequently announced that he has authorized the doubling on steel and aluminum tariffs on Turkey.

"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!" Trump said in a post on Twitter.

The president added, "Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!"

In U.S. economic news, the Labor Department released a report showing a modest increase in consumer prices in the month of July.

The Labor Department said its consumer price index rose by 0.2 percent in July after inching up by 0.1 percent in June. The increase in prices matched economist estimates.

Excluding food and energy prices, the core consumer price index also edged up by 0.2 percent in July, matching the increases seen in the two previous months as well as expectations.

Steel stocks have shown a substantial move to the downside following the news of the increased tariffs on Turkey, with the NYSE Arca Steel Index plunging by 2.3 percent.

Semiconductor, financial, and chemical stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.7 percent, the French CAC 40 Index is down by 1.6 percent and the German DAX Index is down by 1.9 percent.

In the bond market, treasuries are extending the upward move seen in the previous session amid the concerns about Turkey. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.5 basis points at 2.890 percent.

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