Stocks veered lower at Friday's open, as President Trump engaged in a worsening economic crisis in Turkey, while another major analyst downgrade rattled the chip sector.
XTrade Desk (TTD), Universal Display (OLED) and Overstock.com (OSTK) were the early high fliers. Dropbox (DBX) and Sunrun (RUN) fell hard on earnings news. Chip stocks were under early pressure for a second day with Microchip Technology (MCHP) and Intel (INTC) leading the declines.
The Dow Jones industrial average toppled 0.7%. The Nasdaq Composite and the S&P 500 each clocked 0.6% declines. Intel led the declines on the Dow, where seven issues posted losses greater than 1%. Microchip took the deepest loss on both the Nasdaq and the S&P 500. (For updates on this story and other market coverage, visit the Stock Market Today.)
Crashing Turkish Lira Hammers Global Markets
Global currencies began reacting more seriously overnight to Turkey's diving lira, as eurozone regulators raised questions about the exposure of European banks to the crisis. Spain's BBVA, Italy's UniCredit and France's BNP Paribas all have significant operations in Turkey, according to the Financial Times.
The lira accelerated its declines Friday, after Turkish President Recep Tayyip Erdogan declared an "economic war" and called on citizens to convert dollars and gold into lira. Erdogan has halted the central bank's interest rates at 17.75%, hobbling its ability to defend the currency, and Turkey has effectively no dollars held in reserve.
U.S. President Donald Trump piled on to the crisis, tweeting Friday that he had "authorized a doubling of tariffs on steel and aluminum with respect to Turkey" in order to compensate for the declining currency. The U.S. State Department has been attempting to leverage the release of American clergyman Andrew Brunson. Brunson was arrested in a sweep that imprisoned tens of thousands of Turks and non-Turks following an attempted coup against Erdogan in 2016.
Europe's markets responded by deepening early losses. Frankfurt's DAX dropped 1.9% and the CAC-40 in Paris skidded 1.5%, while London's FTSE 100 held to a 0.8% loss in afternoon trade.
In Japan, Tokyo's Nikkei 225 dropped 1.3% as fallout from the Turkey crisis drove the the yen higher, and ripple effects from Morgan Stanley's downgrade of chip-sector stocks hammered the market.
China's markets ended mixed, leaving the Shanghai Composite with a narrow gain and Hong Kong's Hang Seng Index down 0.8%. The Shanghai Composite ended the week up 2%. The Hang Seng closed 2.5% higher.
Trade Desk, Universal Display Lead Upside
IBD 50 stock Trade Desk swept up 27% as a surprise earnings gain and a 54% leap in revenue caught analysts off guard. The digital advertising platform's shares are extended after a breakout from a deep, seven-month base in May.
Planet Fitness (PLNT), also on the IBD 50 list, muscled 5% higher. The budget health club chain reported a third quarter of accelerating earnings growth, on top of a 31% gain in revenue, easily beating analysts' estimates. Full-year guidance was mixed, with earnings below the consensus target, but revenue was higher than expected. Planet Fitness also raised its stock buyback initiative to $500 million. The stock is breaking out above a 50.83 ascending-base entry. The ascending base is a rare chart pattern that can potentially lead to big gains. The 5% buy range tops out at 53.37.
Universal Display jetted 13% higher, after reporting a strong second-quarter earnings beat, while revenue fell much less than expected. The stock is working on a sixth straight weekly advance. Still deep in a seven-month correction, it ended Thursday up 29% from a June low.
Express Scripts (ESRX) jumped 2.9% to lead the Nasdaq 100 and the S&P 500. Glenview Capital Management Manager Larry Robbins countered criticism from activist investor Carl Icahn of Cigna's (CI) planned $54 billion takeover of Express Scripts. Icahn claims the deal significantly overvalues the pharmacy benefits manager. Icahn has a 0.56% share of Cigna, worth about $250 million as of Monday's market close, according to the Wall Street Journal. Glenview reportedly has a $1.3 billion stake divided between Cigna and Express Scripts.
Intel Dives On Sell Downgrade, Microchip Tumbles
Among chip stocks, Dow industrials issue Intel tanked 2.5% after Goldman Sachs downgraded the stock to sell from neutral, and backed off its price target to 44 from 49. The note said delays in moving to next-generation, 10-nanometer chips weakened Intel's competitive stance. Intel shares ended Thursday down 13% from a June high.
Advanced Micro Devices (AMD), the beneficiary of any competitive weakness assigned to Intel, edged up 0.7% ahead of the open. AMD shares are extended, near new highs and up 21% since a breakout in June.
Microchip Technology dropped 11% in opening action. The Chandler, Ariz.-based chipmaker announced late Thursday stronger-than-expected earnings for its fiscal first quarter, and revenue in line with analyst forecasts. Second-quarter revenue guidance was well below consensus views, however.
Cypress Semiconductor (CY), Micron Technology (MU) and Texas Instruments (TXN) were among the other chip names that posted heavy early declines.
Consumer Prices Meet Targets; Oil Eyes Worst Run Since 2015
Consumer prices rose 0.2% in July, the Labor Department reported, up from June's 0.1% advance but in line with economist projections. For the year, prices paid by consumers were up 2.9%, equal to June's pace of growth and also in line with forecasts. Core prices, minus energy and food, rose 0.2% for the month and 2.4% for the year. Consensus views had targeted a 0.2% month-over-month gain, and a 2.3% increase year-over-year.
Oil prices rose, but were still on track to log a sixth straight weekly decline. West Texas Intermediate gained 0.8% and climbed back above $67 per barrel. Oil has not fallen for six consecutive weeks since the downslope of the global oil glut in July 2015. Weekly rig census data is due out from BakerHughes (BHGE) at 1 p.m. ET.
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