NEW YORK: Wall Street stocks closed sharply lower Thursday (Mar 13) on a fresh wave of tariff threats by US President Donald Trump, and despite producer inflation remaining flat.
At the close of trading, the Dow Jones Industrial Average dropped 1.3 per cent to 40,813.57, while the broad-based S&P 500 Index fell 1.4 per cent to 5,521.52.
The tech-heavy Nasdaq Composite Index lost nearly 2 per cent to 17,303.01.
The S&P drop means the index has tumbled into a correction, or down 10 per cent from its highest point of the year, recorded just last month.
CFRA Research chief investment strategist Sam Stovall told AFP that the correction stemmed from “the tariff threats and the uncertainty surrounding retribution, (and) surrounding the possibility of recession as a result”.
“The only problem is we don’t know exactly how long it will go,” Stovall said.
Before trading began, Trump unleashed the threat of a 200 per cent tariff on wine, champagne and other alcoholic beverages from the European Union.
His threat came after the EU announced a series of countermeasures against new US steel and aluminum tariffs – including a sharp hike targeting US whisky.
Trump said he would make good on his threat if the bloc’s planned whisky levy “is not removed immediately”.
On Thursday, government data also showed that the producer price index was flat in February, after a 0.6 per cent rise in January.
“That’s pretty good news in terms of inflation but the problem is, you have a trade war that’s expanding,” said Peter Cardillo of Spartan Capital Securities.
While recent inflation reports have been encouraging, Cardillo added that markets are wary as the full effects of Trump’s tariffs have yet to be seen.
Looking ahead, investors will be eyeing the Federal Reserve’s policy meeting next week, alongside Fed Chair Jerome Powell’s comments on the economy.
