S&P 500 Plunges Into Correction as Trump Threatens New Tariffs

• The S&P 500 entered into a correction Thursday three weeks after hitting record highs following Trump’s 200% tariff threats to European wine and champagne. While inflation cooled in February, the news wasn’t enough to save the S&P from falling 10%.

The most popular index fell into a correction Thursday amid concerns regarding President Donald Trump's latest tariff threats, the most recent inflation data, and a materializing government shutdown.

The S&P 500 dipped 1.4% Thursday, more than 10% below the all-time high the index reached just three weeks ago, falling into correction territory. Wall Street deems a market correction as an index falling more than 10% from a recent peak.

Additionally, the tech-centric Nasdaq Composite, slid nearly 2% and is already into correction territory as of last week. The Dow Jones Industrial Average dropped nearly 550 points, a 1.3% slip.

“I think what the markets are telling us is that they are very concerned about the potential for a recession,” Invesco chief global market strategist Kristina Hooper at told the New York Times . “That is certainly not what markets expected going into 2025.”

The most recent inflation data suggests that prices are cooling off after the consumer price index increased a seasonally adjusted 0.2% for February, sticking inflation at 2.8%, according to the Department of Labor .

Cooled-down prices shouldn’t be seen as reason for optimism since President Trump’s latest tariff warnings have sparked concerns about rising inflation among investors on Wall Street.

On Thursday morning, Trump threatened to impose 200% tariffs on European wines, champagnes, and various spirits as part of a reciprocal response to the European Union's declaration that they would enforce duties of 50% on American whiskeys and bourbons. These new EU taxes were imposed in reaction to Trump’s global tariff increase of 25% on steel and aluminum imports.

“In only a few weeks, the broader market has gone from record highs to correction territory,” chief technical strategist at LPL Financial Adam Turnquist said in a note obtained by CNN Uncertainty surrounding tariffs is primarily being blamed for the market sell-off and is worsening worries about economic expansion.

Growing concerns about a potential government closure are fueling investors' doubts. Senate Democrats aim to obstruct a Republican appropriations measure to prevent ashutdown and have requested the GOP to agree to a blueprint that would provide financing through April 11.

Although Wall Street anticipates market steadiness, it seems that tariff issues will persist since Trump stated to journalists that he won’t grant Canada exemption from tariffs.

“I’m sorry, we have to do this,” he said.

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