US Stocks Drop as Turkish Lira Falls on More Sanctions Threat

US stocks edged lower on Friday as renewed weakness in the Turkish lira triggered by the US’ warning of additional sanctions rattled investors.

The blue-chip Dow futures were down 0.1 percent to $25,563.0, the S&P 500 futures dropped 0.2 percent to $2,838.25, while the tech-heavy Nasdaq 100 futures slipped 0.7 percent to $7,333.50.

Declines in US equities after US President Donald Trump’s administration cautioned that Turkey should expect more economic sanctions unless it releases detained American pastor Andrew Brunson.  

US Treasury Secretary Steven Mnuchin said sanctions were set for implementation if Ankara did not hand over Brunson, who was indicted in Turkey on charges of espionage and links to terror groups.

Trump later tweeted that the US will pay nothing for the release of Brunson, but they are cutting back on Turkey.

Washington’s threat left the Turkish lira with more than a 6 percent loss on Friday, having lost nearly 40 percent of its value against the dollar this year. The pair gained 5.3 percent to 6.1468, retreating from its intraday high of 6.3507.

The Turkish banking watchdog has taken necessary measures to steady the currency, curbing futures transactions for offshore investors and cutting limits on swap transactions, although some economists have demanded for more decisive actions.

Chipmakers’ Earnings Outlook Hurts Sentiment

Further weighing down the US stocks was the lower-than-expected outlook from chipmakers which has hit investors’ bullish sentiment.

Shares of Nvidia Corp. fell 4 percent to $247.08 on Friday, after declining 6 percent in the previous session as the firm reported revenue forecast of $3.25 billion on Thursday, compared with analysts’ expectation of $3.34 billion.

Applied Materials Inc.’s disappointing sales outlook for the fiscal fourth quarter also pulled its stock down by 8.9 percent to $43.19. The chipmaker estimated net sales of between $3.85 billion and $4.15 billion for the quarter.

Outside the tech sector, tractor company Deere & Company dropped 0.6 percent to $134.43 after posting adjusted earnings per share of $2.59 for its fiscal third quarter. Analysts forecast a profit of $2.75 per share.

Shares of retailer Nordstrom Inc. on the other hand, was up 10.8 percent to $57.94 after climbing more than 13 percent in after-hours trading, following a better-than-expected earnings and sales results for the second quarter.

Nordstrom’s net income for the quarter came in at $162 million which was 84 cents higher than analysts’ expectations, while its revenue added 7.1 percent to $4.07 billion from a year earlier, beating an estimated $3.96 billion in sales.

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