Will turmoil spread? Investors are nervous
NEW YORK — Stocks fell further on Wall Street Monday as Turkey's central bank was unable to stop a steep plunge in that nation's currency. That's helping to push the dollar higher, which hurts big U.S. exporters.
Stocks were coming off their worst losses in a month as investors worried about financial and economic upheaval in Turkey and the possibility it will spread to other countries.
Asian markets fell overnight, while European markets were slightly lower.
Global markets skidded Friday as investors worried that financial distress in Turkey could affect the international banking system and the broader economy.
Many analysts say that isn't likely, but it's caused sharp losses for stocks.
The lira has been falling as investors question whether the government of President Recep Tayyip Erdogan can cope with problems including the weakening currency and a diplomatic spat with Washington that has brought higher U.S. tariffs.
Investors also backed away from Argentina's stock market. The Argentinian peso sank to an all-time low amid investor caution and a local corruption scandal involving former government officials.
While Turkey and Argentina face very different political situations, the currencies of both countries have tumbled to alltime lows against the dollar, partly because rising interest rates in the U.S. lure investors to take money out of their markets and move it to the U.S.
The U.S. dollar is the strongest it has been in over a year, which could over time create problems for U.S. companies that depend on overseas sales.
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said the dollar has strengthened because economic growth has picked up and other regions aren't doing as well.
“The U.S. is a relative beacon of strength with stable to improving economy. That suggests a stronger dollar,” he said.
Energy and industrial companies and basic materials companies took some of the worst losses. Technology companies held up better.
After a yearlong stretch where much of the global economy was speeding up together and stocks were rising, the recent losses for Turkey and Argentina have caused emerging market indexes to fall out of favor.
Stocks were on a five-week winning streak before last week, and strong corporate earnings reports were a big factor. But most of those reports are done, and Sandven, of U.S. Bank, said stocks may spend the next two months wavering.
Most retailers were down, but Amazon advanced 0.5 percent to $1,896.20. It passed travel website Booking Holdings to become the highest-priced S&P 500 stock.