By Rachel Koning Beals and Ryan Vlastelica
Dollar index at strongest in a year; consumer price data ahead
U.S. stock-index futures pointed to a lower open 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, viewed as a haven relative to other currencies, muscled to its firmest level in nearly a year (http://www.marketwatch.com/story/dollar-index-jumps-to-around-one-year-high-as-turkeys-lira-gets-rocked-2018-08-10) against major rivals.
What are early indications showing?
Futures on the Dow Jones Industrial Average fell 113 points, or 0.4%, to 25,378. Futures on the S&P 500 shed 13 points, or 0.5%, to 2,840, while futures on the Nasdaq-100 gave up 43 points, or 0.6%, to 7,432.
U.S. stocks closed mostly lower Thursday as weak energy and industrial shares weighed on the market, but the Nasdaq bucked the trend to end slightly higher. That marked its eighth straight session, its longest winning streak since October.
On Thursday, the Dow industrials fell 74.52 points, 0.3%, to 25,509.23, while the S&P 500 shed 4.12 points, or 0.1%, to 2,853.58. The Nasdaq Composite Index edged up 3.46 points to 7,891.78.
For the week, the Dow and S&P 500 have narrow weekly gains under threat, while the Nasdaq is on track for a weekly return nearing 1%.
What's driving the market?
The steep decline in the Turkish lira comes after the European Central Bank expressed concern about the country (http://www.marketwatch.com/story/ecb-worries-that-some-european-banks-may-be-too-exposed-to-turkey-ft-2018-08-10), 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 (http://www.marketwatch.com/story/heres-why-there-may-be-more-pain-in-store-for-turkeys-lira-on-friday-2018-08-02).
The iShares MSCI Turkey ETF(TUR) plummeted 6.2% in the U.S. premarket. It has already plunged more than 42% thus far this year.
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 the S&P and the Nasdaq are within 1% of record levels.
Don't miss:Worried about Turkey? Here's what it will take to push Wall Street's buttons (http://www.marketwatch.com/story/worried-about-turkey-heres-what-it-will-take-to-push-wall-streets-buttons-2018-08-10)
Russia's market volatility added to the global theme. Newly announced U.S. sanctions--and the potential for a second round of actions in 90 days--roiled Russia's currency and blue-chip stocks as the country braced for further economic pain (http://www.marketwatch.com/story/us-sanctions-take-heavy-toll-on-russian-stocks-and-ruble-2018-08-10) amid uncertainties over the Trump administration's commitment to enforcement.
In Moscow, the ruble shed as much as 5% against the dollar on Thursday and stock averages there plunged as much as 9%.
U.S. stock trading in recent sessions has mostly been a tug of war between concerns about the continuing trade dispute between the U.S. and China and positive sentiment over strong corporate earnings against a healthy economic backdrop. U.S. earnings, on the whole, are solid, with the number of companies beating earnings estimates at the highest point since the third quarter of 2009, according to JPMorgan Chase.
Read: Behold the 'scariest chart' for the stock market (http://www.marketwatch.com/story/behold-the-scariest-chart-for-the-stock-market-2018-08-08)
What data are in focus?
The consumer price index rose 0.2% in July; a reading of core prices rose by the same amount.
Separately, a snapshot of the federal budget hits at 2 p.m.
See more in the U.S. Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic).
What are market participants saying?
"Turkey's currency volatility has recently accelerated and now gotten to the point where it's beginning to impact global markets as investors worry about European banking exposure, said Alec Young, managing director of global markets research at FTSE Russell.
Mike Loewengart, vice president of investment strategy at E*Trade, said that the CPI data "sends a signal that inflation is here to contend with. Investors have reason to take caution, with stagnant wage growth this news could start affecting their wallet."
Which stocks are in focus?
Overstock.com Inc.(OSTK) surged 15% in premarket trading a day after news about a private-equity investment overshadowed a larger-than-expected quarterly loss (http://www.marketwatch.com/story/overstock-shares-rally-as-private-equity-deal-outweigh-quarterly-loss-2018-08-09) for the online retailer.
Dropbox Inc.(DBX) lost 5% before the bell. The retreat comes after a second-quarter earnings report (http://www.marketwatch.com/story/dropbox-earnings-easily-beat-expectations-2018-08-09), which also included news that Chief Operating Officer Dennis Woodside was stepping down and a post-IPO lockup on shares would expire earlier than previously planned.
Tronc Inc.(TR) shares slipped in the extended session Thursday following a run-up fueled by reports of a possible buyout (http://www.marketwatch.com/story/tronc-shares-slip-after-quarterly-results-following-buyout-report-rally-2018-08-09) after the media company reported quarterly results.
Redfin Corp.(RDFN) tumbled 16% in premarket trading a day after it forecast slower revenue growth (http://www.marketwatch.com/story/redfin-shares-down-nearly-7-after-company-casts-doubt-on-real-estate-market-2018-08-09) in the third quarter.
How are other markets performing?
European stocks fell (http://www.marketwatch.com/story/european-stocks-tumble-as-ecb-raises-questions-about-turkey-contagion-2018-08-10), as did Asian markets (http://www.marketwatch.com/story/trade-oil-price-worries-blow-asian-markets-lower-2018-08-09). The Stoxx Europe 600 was down 0.7% to 387.30, after finishing Thursday's session with a 0.1% gain.
The Turkish lira has been consistently hovering around an all-time low against the U.S. dollar this summer. It fell about 5.3% against the greenback, paring more severe losses overnight. One dollar recently bought 5.8595 Turkish lira, compared with 5.5426 late Thursday in New York, according to Dow Jones Market Data.
According to FactSet data, the lira is down 13.3% this week, bringing its year-to-date decline to more than 35%.
The ICE U.S. Dollar Index was up 0.4%, off earlier sharper gains. (http://www.marketwatch.com/story/dollar-higher-ahead-of-data-new-zealand-currency-at-lowest-since-2016-2018-08-09)
U.S. benchmark West Texas Intermediate futures were up slightly, (http://www.marketwatch.com/story/oil-pauses-slide-as-iran-production-trade-row-tug-at-market-2018-08-09)while gold futures fell 0.2%, hit by the surging dollar.
Also read:Another stock market risk: GDP growth is slowing across the globe (http://www.marketwatch.com/story/another-stock-market-risk-gdp-growth-is-slowing-across-the-globe-2018-08-10)
(END) Dow Jones Newswires
August 10, 2018 08:56 ET (12:56 GMT)
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