The S&P 500 enters correction territory after Trump's tariff threats fuel uncertainty in markets
Wall Street’s decline continued Thursday, with the S&P 500 falling more than 10 percent from its record high set last month, according to BNN Bloomberg.
The drop, classified as a “correction” by professional investors, came after US President Donald Trump escalated trade tensions by threatening significant tariffs on European wines and alcohol.
The S&P 500’s 1.4 percent decline marked its first correction since 2023.
The Dow Jones Industrial Average fell 537 points, or 1.3 percent, while the Nasdaq composite dropped 2 percent. The market has seen sharp fluctuations, with the Dow swinging between slight gains and a 689-point drop during the day.
Trump’s latest move included a threat of 200 percent tariffs on Champagne and other European wines unless the European Union reversed a tariff on US whiskey.
The EU announced its tariff on Wednesday in response to US duties on European steel and aluminum.
Concerns over uncertainty surrounding Trump's trade policies have led to declining confidence among US households and businesses. Some businesses have reported shifts in consumer behaviour due to the unpredictability of tariffs.
Economists have also raised concerns about the possibility of stagflation, where economic growth slows while inflation remains high.
With limited policy tools available to address such a scenario, Washington faces challenges in managing the impact of tariffs on the economy.
Economic data released Thursday provided some positive news. A report indicated that wholesale inflation last month was lower than expected, following a similar trend in consumer inflation data from the previous day.
Another report showed fewer US workers filed for unemployment benefits than anticipated, suggesting continued resilience in the job market.
If employment remains stable, it could help sustain consumer spending, a key driver of the US economy.
Stock declines were widespread, with artificial intelligence-related companies among the hardest hit.
Palantir Technologies fell 4.8 percent, Super Micro Computer lost 8 percent, and Nvidia fluctuated before closing down 0.1 percent.
Critics have pointed to AI stock valuations being driven too high by market enthusiasm. Tesla, which had gained for two consecutive sessions, fell 3 percent and is down more than 40 percent in 2025.
Retail stocks also saw losses, with American Eagle Outfitters dropping 4.1 percent. The retailer cited “less robust demand and colder weather” as factors affecting its performance.
While it reported stronger-than-expected quarterly earnings, it projected lower revenue for the upcoming year.
In contrast, Intel saw a sharp increase, climbing 14.6 percent after announcing Lip-Bu Tan as its new CEO.
The semiconductor industry veteran, who previously served on Intel’s board, will take over next week, following the abrupt retirement of former CEO Pat Gelsinger amid challenges at the company.
The S&P 500 ended the day down 77.78 points at 5,521.52. The Dow Jones Industrial Average fell 537.36 points to 40,813.57, while the Nasdaq composite declined 345.44 points to 17,303.01.
In the bond market, the yield on the 10-year Treasury fell to 4.27 percent from 4.32 percent. Treasury yields have been declining since January, when they neared 4.80 percent, reflecting reduced expectations for US economic growth.
While analysts are not widely predicting a recession, recent reports indicate declining confidence among consumers and businesses.
Internationally, stock indexes in Europe and Asia also fell, though losses were relatively modest.
