US benchmarks on Wall Street continued to face selling pressure after a brief one-day respite as new tariff threats from President Donald Trump outweighed a softer-than-expected wholesale inflation print.
The S&P 500 has now entered correction territory after a 1.4% drop overnight. The index is now down 10.1% from its peak, just a month after hitting a record closing high on February 19.
The Dow Jones fell another 550 points, marking its fourth straight day of losses, while selling in shares of Tesla and Apple took the Nasdaq lower by 1.9%. The S&P 500 and Nasdaq are down 4.3% and 4.9% for the week so far. The Dow has corrected 4.7% during this period and is on course for its worst week since June 2022.
The Russell 2000 index is approaching bear market territory, having corrected 19% from the top. A 20% decline from peak means the index is under a bear market.
Speculative corners on Wall Street from unprofitable tech to the most-shorted shares and crypto got crushed. An $8 billion exchange-traded fund tracking junk bonds saw one of its biggest losses in 2025, bucking the rise in Treasuries.
In another sign of a trade-war escalation, Trump threatened to enact a 200% tariff on European wine, champagne and other alcoholic beverages. Later Thursday, Trump said he would not repeal tariffs on steel and aluminum that took effect this week, nor back off plans for sweeping reciprocal tariffs on global trading parters set to start as soon as April 2.
“In only a few weeks, the broader market has gone from record highs to correction territory,” said Adam Turnquist at LPL Financial. “Tariff uncertainty has captured most of the blame for the selling pressure and is exacerbating economic growth concerns.”
The yield on 10-year Treasuries fell five basis points to 4.27%. A $22 billion US sale of 30-year bonds was weak. The dollar rose 0.1%.
Former Treasury Secretary Steven Mnuchin discounted risks of a US recession, and played down the current selloff in equities, advising investors against overreacting to President Trump’s aggressive trade tactics.
“We came in with the market being fully priced, so I think a 5% to 10% correction on the S&P or the Nasdaq actually makes sense,” Mnuchin said in an interview with Bloomberg’s Saleha Mohsin Thursday.
With fears remaining at the forefront, Bespoke Investment Group strategists noted that investor sentiment also remains very frail. They cited the latest weekly poll from the American Association of Individual Investors, which showed that bearish sentiment was above 55% for the third straight week.
“The only other time since 1987 that bearish sentiment was above the ‘speed limit’ was in the three weeks ending March 4, 2009,” the Bespoke strategists said.
US equities are pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise, according to JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note.
“While there is clearly elevated uncertainty in the near term as the Trump Administration has at least initially prioritized more disruptive polices, the risk is that credit markets are proven right,” they said.
(With Inputs From Agencies.)