Wall Street closes sharply lower amid flight to safety

  • CBOE Volatility Index rises more than 16% on Friday.
  • Turkis lira's collapse weighs on financials.
  • Recovering crude oil prices help the energy close in the positive territory.

Major equity indexes in the United States started the day in the negative territory and extended their losses as investors stayed away from risk-carrying assets. The CBOE Volatility Index, Wall Street's fear gauge, rose more than 16% on the day to reflect the risk-off mood in the markets.

The Turkish lira, which was already under pressure amid the ongoing political crisis between the United States and Turkey, continued to weaken on Friday and lost more than 20% against the greenback on a daily basis. “It was a classic risk-off move. You worry about the collateral damage. You worry about the effects on Europe. You have banks losing because the 10-year U.S. Treasury came down,” Quincy Krosby, chief market strategist at Prudential Financial in New Jersey, told Reuters.

The S&P 500 Financials Index lost more than 1% on the day while the risk-sensitive S&P 500 Information Technology Index erased 0.8%. The only major index that was able to stay in the positive territory was the S&P 500 Energy Index, which gained 0.27%. The weekly report released by Baker Hughes Energy Services on Friday showed that driller in the U.S. added ten rigs this week to bring the total count up to 869.

The Dow Jones Industrial Average dropped 196.02 points, or 0.77%, to 25,313.21, the S&P 500 lost 20.31 points, or 0.71%, to 2,833.27 and the Nasdaq Composite fell 52.67 points, or 0.67%, to 7,839.11. On a weekly basis, the Dow and the S&P lost 0.6% and 0.3% respectively while the Nasdaq added 0.3%.

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