Benchmark S&P 500 falls 1.39 percent, dragging index more than 10 percent below its February peak.
The United States’ stock market has taken another tumble following US President Donald Trump’s threat to impose steep tariffs on wine and other alcoholic products from the European Union.
The benchmark S&P 500 fell 1.39 percent on Thursday, dragging the index into a correction – Wall Street lingo for a decline of 10 percent or more from the peak.
Corrections are not unusual in the US stock market, which has consistently recovered from losses over its history, though they can be unsettling for investors in the shortterm.
The S&P 500 last entered correction territory in October 2023, when the index slid 10.3 percent from its peak that July.
The Dow Jones Industrial Average and tech-heavy Nasdaq Composite also recorded sharp declines, falling 1.30 percent and 1.96 percent, respectively.
The latest losses mean that US stocks have lost more than $5 trillion in market value since their February peak.
Trump’s back-and-forth announcements on trade have unnerved markets, with investors struggling to gauge whether his tariffs are here to stay or are a bargaining tactic to extract concessions.
“The main difference between the trade war under Trump 1.0 and Trump 2.0 is duration,” the Kobeissi Letter, a financial newsletter founded by Adam Kobeissi, said on X.
“In his first term, Trump’s tariffs were taken to be more of a posturing tactic. This time around, markets are pricing in tariffs for longer on more trade partners. This is a material change.”
In his latest trade salvo on Thursday, Trump threatened to slap a 200 percent tariff on wine, champagne and other alcoholic products from the EU.
Trump’s threat came after the bloc announced plans to impose a 50 percent tariff on US bourbon whiskey from April 1 in response to US duties on steel and aluminium that went into effect on Wednesday.
On Tuesday, Trump backed off from a threat to impose a 50 percent tariff on Canadian aluminium and steel after the province of Ontario agreed to temporarily suspend a surcharge on electricity exports.
Trump and his aides have played down the stock market turmoil as a transition period for the economy.
“I think this country is going to boom. But as I said, I can do it the easy way or the hard way,” Trump told reporters on Tuesday.
“The hard way to do it is exactly what I am doing, but the results are going to be 20 times greater.”