S&P 500 ends down, joins Nasdaq in correction. Dow slides as Trump zeros in on EU tariffs
U.S. stocks ended lower, with the broad S&P 500 index dropping into correction territory, after President Donald Trump escalated risks of a trade war with the European Union.
A correction is at least 10% down from a record high, which for the S&P 500 was set on February 19. The Nadaq offcially entered a correction a week ago when the tech-laden index closed at least 10% below its record high 20,174 on December 16. The Nasdaq now sits around 14% below its record high.
Trump said he would impose 200% duties on European alcoholic beverage imports, including wine, if the EU does not remove surcharges on U.S. whiskey. Earlier, he said he would penalize the bloc if it enacted retaliatory tariffs on American goods next month.
Trump's back and forth on tariffs has roiled markets, even overshadowing good inflation news.
The S&P 500 index fell 1.39%, or 77.78 points, to 5,521.52. The blue-chip Dow dropped 1.3%, or 537.36 points, to 40,813.57 and marking the fourth consecutive day of declines and headed for its worst week since June 2022. The tech-heavy Nasdaq slid 1.96%, or 345.44 points, to 17,303.01.
Safe assets rose amid the tumult. The benchmark 10-year yield fell to 4.272% as investors fled to safer assets. Treasury prices move in the opposite direction as yields. Gold prices rose to a record, racing towards the $3,000 per ounce milestone. It was the yellow metal's twelfth record this year. Gold was last at $2,994.80 per ounce.
February’s producer price index, which measures the cost of producing consumer goods, was flat, compared with an expected increase. This comes off the heels of Wednesday's softer-than-expected February consumer price index and gets the Federal Reserve closer to its 2% inflation goal.
"The economy entered 2025 with inflation on a downward trajectory," said Bill Adams, chied economist at Comerica Bank. "However, the outlook for inflation depends more on tariffs, deportations, and DOGE (Department of Government Efficiency) than the backward-looking data releases right now."
Earlier in the week, risks of a trade war escalated after Trump threatened to double to 50% a tax on Canadian aluminum and steel. in response to a 25% duty from Canada on some of its electricity exports to the U.S. The tit-for-tat plunged markets, which then recovered some ground after Canada backed down. Trump followed suit, a trade war was averted, but damage was done to the stock market. All three major stock indexes closed lower on that rollercoaster day and continue to fall as Trump turns his focus now to Europe.
However, Treasury Secretary Scott Bessent downplayed recent stock market gyrations. “I’m not concerned about a little bit of volatility over three weeks," he said in a CNBC interview Thursday morning.
"If you start looking at micro horizons, stocks become very risky," he added. "So we are focused over the medium-, long-term" and the "real economy."
Government shutdown?
A funding bill in the U.S. Senate that will keep the government running through September 30 also lingers in the background. There's only one day to go before a partial shutdown.
The Republican-controlled House passed the bill earlier in the week.
Democrats in the Senate called for a one-month extension of existing spending, buying time to complete more comprehensive appropriations bills for the year. Thursday morning, however, there were reports Senate Democrats are ready to back down. They're reportedly considering allowing the Republican bill to pass to keep the government funded for six months in exchange for a doomed-to-fail vote on their own 30-day alternative.
Corporate news
- Adobe shares fell 13.85% after the software maker's quarterly results missed analysts' forecasts.
- Intel named former board member Lip-Bu Tan as its new chief executive. Shares of the semiconductor company jumped 14.6%.
- American Eagle Outfitters posted lower quarterly sales and said this year was off to a slower-than-expected start due to weaker demand and colder weather. Its annual revenue forecast was below analysts' expectations. The clothing retailer's shares shed 4.1%.
- Dollar General's quarterly sales topped analysts' expectations. Shares rose 6.81%.
- Automation software company UiPath issued a soft outlook. Its shares dropped 15.72%.
- SentinelOne's shares slid 5.54% after the cybersecurity company's sales outlook missed Wall Street's forecasts.
Cryptocurrency
Bitcoin prices eased, giving back some of Wednesday's gains made on softer-than-expected consumer inflation. However, the digital unit remains above the key psychological $80,000 level.
The Wall Steet Journal said Trump's family is in talks for a stake in crypto exchange Binance's U.S. arm but that provided little support for crypto. At the same time, Binance’s billionaire founder, Changpeng Zhao has been pushing for the Trump administration to grant him a pardon, people familiar with the matter said.
Bitcoin was last down 3.77% at $80,548.46.
The story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.