Wall Street ended sharply lower overnight and the S&P 500 confirmed it is in a correction after cool inflation data was overshadowed.
Wall Street ended sharply lower overnight and the S&P 500 confirmed it is in a correction after cool inflation data was overshadowed by fears the escalating tariff war being waged by the United States against some of its biggest trading partners could reignite inflation and tip the economy into recession.
In the latest episode of Trump's multi-front trade war, the European Union responded to blanket US tariffs on steel and aluminum by imposing a 50 per cent tax on American whiskey exports - prompting the president to threaten on Truth Social to charge a 200 per cent tariff on imports of European wines and spirits.
A broad selloff sent all three major US stock indexes tumbling, with losses in tech and tech-related megacap shares dragging the Nasdaq nearly 2 per cent.
"Sentiment's terrible," said Mike Dickson, head of research at Horizon Investments in Charlotte, North Carolina. "There's new tariff headlines every day, and that's weighing on things."
"And you're seeing it most acutely in some of the more sensitive areas of the market like the fairly inflated Magnificent seven," Dickson added. "It doesn't feel great out there right now."
The S&P 500 closed 10.1 per cent below its February 19 record closing high, confirming the bellwether index has been in a correction since then.
On March 6, the Nasdaq confirmed it is in a correction by closing 10.4 per cent lower than its all-time closing high reached on December 16.
The Dow Jones Transportation index, widely viewed as a barometer of US economic health, closed 18.9 per cent below its November 25 record closing high; dipping 20 per cent or more below that level would confirm the index is in a bear market.
"There's still a lot of uncertainty concerning the economy," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
"Some of that uncertainty is certainly being driven by tariffs, but there's other uncertainty out there, and it's got investors thinking maybe the hard landing is happening after all."
A Reuters/Ipsos poll of Americans conducted March 11-12 showed that 57 per cent of poll participants believe Trump's moves to shake up the economy are too erratic, and 53 per cent think the tariff war will do more harm than good.
The Labor Department's Producer Price Index (PPI) appeared to echo Wednesday's CPI data, with cooler-than-expected readings appearing to confirm inflation remains on its meandering path downward as it approaches the US Federal Reserve's 2 per cent annual target.
This, along with a tame jobless claims report, provided some assurance that, for now, inflation is headed in the right direction and the labour market is on solid footing.
Markets were also eyeing the ongoing wrestling match on Capitol Hill as lawmakers scramble to pass a stop gap spending bill ahead of a fast-approaching deadline to avert a partial government shutdown.
The Dow Jones Industrial Average fell 537.36 points, or 1.30 per cent, to 40,813.57, the S&P 500 lost 77.78 points, or 1.39 per cent, to 5,521.52 and the Nasdaq Composite lost 345.44 points, or 1.96 per cent, to 17,303.01.
Among the 11 major sectors in the S&P 500, all but utilities ended in negative territory, with communication services and consumer discretionary falling the most.
Intel jumped 14.6 per cent after the chipmaker appointed industry veteran Lip-Bu Tan as its chief executive officer.
Adobe dropped 13.9 per cent after the software company forecast quarterly revenue in line with estimates.
Discount retailer Dollar General reported disappointing same store sales estimates but provided upbeat quarterly results, sending its shares up 6.8 per cent.
Declining issues outnumbered advancers by a 2.54-to-1 ratio on the NYSE. There were 53 new highs and 315 new lows on the NYSE.
On the Nasdaq, 1,159 stocks rose and 3,189 fell as declining issues outnumbered advancers by a 2.75-to-1 ratio.
The S&P 500 posted no new 52-week highs and 35 new lows while the Nasdaq Composite recorded 21 new highs and 309 new lows.
Volume on US exchanges was 15.11 billion shares, compared with the 16.60 billion average for the full session over the last 20 trading days.
