S&P 500 index dips 1.39 percent, putting it over 10 percent below its high from February.
The stock market in the United States has experienced another decline following President Donald Trump’s warning of significant tariffs on wine and other alcoholic beverages from the European Union.
On Thursday, the S&P 500 index decreased by 1.39 percent, pushing it into correction territory— a term used in Wall Street to describe a decline of 10 percent or more from its peak.
Such corrections are a common occurrence in the US stock market, which has a history of bouncing back from downturns, although they can cause anxiety for short-term investors.
The last time the S&P 500 was in correction territory was in October 2023, when the index fell by 10.3 percent from its peak in July.
Both the Dow Jones Industrial Average and the tech-focused Nasdaq Composite also saw significant drops, with declines of 1.30 percent and 1.96 percent, respectively.
The recent downturns have resulted in a loss of over $5 trillion in market value for US stocks since their peak in February.
Trump’s fluctuating statements regarding trade have unsettled the markets, leaving investors uncertain whether his tariff proposals are permanent or merely a negotiation strategy.
As noted by the Kobeissi Letter, a financial newsletter led by Adam Kobeissi, “The main difference between the trade war under Trump 1.0 and Trump 2.0 is duration.”
“During his first term, Trump’s tariffs were seen more as a posturing tactic. This time, however, markets are anticipating prolonged tariffs affecting more trade partners. This represents a significant shift.”
In his most recent trade comment on Thursday, Trump threatened a hefty 200 percent tariff on wine, champagne, and other alcoholic goods from the EU.
This threat followed an announcement from the EU regarding a 50 percent tariff on American bourbon whiskey starting April 1, in retaliation for US tariffs on steel and aluminum that took effect on Wednesday.
Earlier on Tuesday, Trump had retracted a threat to impose a 50 percent tariff on Canadian aluminum and steel after Ontario agreed to temporarily halt a surcharge on electricity exports.
Trump and his team have characterized the current stock market fluctuations as a transition phase for the economy.
“I believe this country is poised for a boom. As I mentioned, I can approach this the easy way or the hard way,” Trump told reporters on Tuesday.
“Choosing the hard way is exactly what I’m doing, but the outcomes will be exponentially greater.”
