Wall Street suffered significant losses on Thursday, with the S&P 500 plunging more than 10% from its recent peak, marking its first correction since 2023. The sell-off was primarily driven by President Donald Trump’s escalating trade war, which weighed heavily on investor sentiment. The S&P 500’s 1.4% decline, alongside a 537-point drop in the Dow Jones Industrial Average (1.3%), and a 2% fall in the Nasdaq composite, reflected the deepening market anxiety.
Trump’s latest move, threatening 200% tariffs on European wines, particularly Champagne, unless the European Union retracts a new tariff on U.S. whiskey, added fuel to the fire. This followed the EU’s retaliation on Wednesday, imposing a 25% tariff on U.S. steel and aluminum imports. These escalating trade tensions have sparked growing concerns about the potential economic fallout, particularly as businesses and households report diminishing confidence due to the uncertainty surrounding tariff policies.
Economic Data Offers Mixed Signals Amid Tariff Fears
Despite the market’s steep decline, there was some positive economic news. Inflation at the wholesale level showed signs of easing, with a report revealing milder-than-expected inflation figures, continuing a trend from the previous day’s consumer inflation report. Additionally, jobless claims fell, suggesting that the U.S. job market remains robust.
However, the good news on inflation and employment could not fully offset the barrage of tariff-related uncertainties. Analysts remain concerned about the possibility of “stagflation,” where economic growth stagnates while inflation remains high due to the ongoing trade war. The Federal Reserve faces a difficult balancing act, with any rate cuts potentially stoking inflation further.
AI Stocks Under Pressure; Intel Sees Gains
Stock performance was volatile, particularly in the technology sector. Artificial intelligence stocks, which had surged in recent months, continued their slide. Palantir Technologies dropped 4.8%, Super Micro Computer lost 8%, and Nvidia fluctuated before closing down 0.1%. These stocks have faced increased scrutiny as their rapid price growth during the AI boom has drawn criticism.
In contrast, Intel’s shares surged by 14.6% after announcing the appointment of Lip-Bu Tan as CEO, following the abrupt retirement of Pat Gelsinger. Intel’s appointment of a seasoned semiconductor industry veteran boosted investor confidence in the company’s recovery.
Market Summary
Overall, the S&P 500 fell 77.78 points, closing at 5,521.52, while the Dow Jones dropped 537.36 points to 40,813.57, and the Nasdaq composite declined 345.44 points, settling at 17,303.01. Bond yields also fell, with the yield on the 10-year Treasury sinking to 4.27%, down from 4.32%.
While a recession is not imminent, the market’s recent decline, coupled with souring consumer and business confidence, has created a climate of uncertainty. Stock markets abroad also saw modest declines in Europe and Asia, reflecting the global ripple effects of the U.S. economic turbulence.
