- Emerging-market currencies weaken
- Gold and Treasuries gain as investors flee to safety
- Microsoft beats forecasts in Q2
Dow Jones: -0.61%
S&P 500: -0.68%
Stocks sunk sharply again on Friday on a quiet day for economic data as investors scaled back risk appetite ahead of the weekend.
Analysts said that the turbulence and weakness in emerging-market currency markets - the Argentinian peso, Turkish lira, Russian ruble, Ukrainian hryvnia, South African rand and Brazilian real - was prompting investors to shy away from riskier assets and move towards safer investments.
As such, gold prices rose as much as 0.8% to a two-month high of $1,273.20 an ounce today; US Treasuries also advanced, with the yield on a 10-year bond down five basis points at 2.72%.
"Having led the recovery back in 2008, emerging markets are showing a worrying potential to turn from hero to villain on current form, and seem destined to be a focus for investors in the short term," said Toby Morris, Senior Sales Trader at CMC Markets.
Markets are still reacting to data yesterday which revealed a surprise contraction in China's manufacturing sector this month, along with a poor batch of economic figures from the US on manufacturing and existing-home sales.
Concerns over the effects of the Federal Reserve's tapering plans are also still having an impact on developing markets, with speculation ramping up ahead of the next policy meeting at the end of the month. Investors are waiting to see whether policymakers will continue to reduce asset purchases by $10bn a month after last month's decision to cut them from $85bn to $75bn.
Turning to today's agenda, the World Economic Forum in Davos, Switzerland, continues with celebrities and leaders from across the globe outlining their views on the economy and ways to spur growth. US Secretary of State John Kerry will speak later today at a special address at Davos.
Microsoft jumps after strong results
Software giant Microsoft advanced after reporting a better-than-expected rise in both revenue and profit for its fiscal second quarter. Results were helped by strong demand for its new Xbox game console.
Procter & Gamble gained after the consumer-products firm reported a less-than-expected fall in second-quarter earnings and kept its full-year forecasts.
Pharmaceuticals group Bristol-Myers Squibb also managed to beat Street forecasts even though profits fell 21% in the fourth quarter.
International Game Technology was a heavy faller after the Las Vegas-based company posted first-quarter profit that missed analysts' estimates.
Intuitive Surgical retreated after the maker of a robotic-surgery devices posted a fall in fourth-quarter sales of systems.
Starbucks edged higher as the coffee chain reported an increase in net income that beat market expectations. Revenues also rose to a record $4.2bn during its fiscal first quarter.