FOX Business: Capitalism Lives Here

U.S. equities took a blow Friday as worries flared up that volatility in emerging markets will ricochet into larger marketplaces.

Today's Markets

As of 3:20 p.m. ET, the Dow Jones Industrial Average fell 266 points, or 1.6%, to 15932, the S&P 500 plummeted 32.7 points, or 1.8%, to 1796 and the Nasdaq Composite slumped 82.4 points, or 2%, to 4136.

The foreign exchange market was in focus Friday after Argentina moved to devalue its currency. The Argentine peso has tumbled 12.7% in the biggest devaluation in more than a decade, according to Nomura, as the government struggles to control its foreign reserves and attempts to boost its fragile economy. Other emerging-market currencies like the Turkish lira also took a beating. 

Michael Block, chief strategist at Rhino Trading Partners, said the reason moves in these currencies are hitting U.S. markets is because of correlation. He said the same investors that trade U.S. stocks and Treasuries also engage in currency trading. As those people swiftly adjust positions abroad, they also need to make changes to their portfolio of U.S. holdings. 

"This is the only reason why Argentina matters," he said, "that said, this will blow over soon."

Peter Boockvar, chief market analyst at The Lindsey Group, added that as the Federal Reserve eases its vast asset-purchase program -- called QE3 -- issues that had been brewing will bubble to the surface. 

"This is contagion from the Fed and the possibility of no more QE. Who cares about Argentina, they’ve been a mess for many years," he said. "QE covers up all the warts and blemishes and once it starts going away, they all come to the surface."

The Dow was on track to post its worst week since June, while the S&P 500 was poised for its worst week since December. Traders have been moving from assets that are seen as risky, to safe havens like U.S Treasury bonds.

On the corporate front, Microsoft (MSFT) posted quarterly profits that easily beat expectations after the closing bell on Thursday. Procter & Gamble (PG) posted a slight quarterly beat on the bottom line, and top-line results that matched expectations. 

Elsewhere, in commodities, U.S. crude oil futures fell 25 cents, or 0.26%, to $97.07 a barrel. Wholesale New York Harbor gasoline fell 0.48% to $2.649 a gallon. Gold rose $7, or 0.55%, to $1,270 a troy ounce. 

Follow Adam Samson on Twitter @adamsamson.