S&P 500 approaches correction territory as stagflation fears, Trump tariff threats shake markets
Trump’s tariffs threats and actions have ignited a commerce struggle that many economists say threatens to undermine world financial stability. On Thursday, Trump stated he would impose a 200% responsibility on EU wine and champagne imports in response to the area’s concentrating on of U.S. whiskey imports — itself a response to the president’s 25% metal and aluminum duties coming on-line.
In the meantime, the prospect of stagflation — that means accelerating worth will increase alongside lackluster progress — has elevated. Underlying information in two inflation reviews this week counsel the Federal Reserve’s most well-liked measure of worth progress will present firmer worth progress occurred in February, undercutting Trump’s marketing campaign promise to counter worth will increase.
On Thursday, Treasury Secretary Scott Bessent stated that the Trump administration is extra targeted on the long-term well being of the economic system and markets, slightly than short-term actions. “I’m not involved about a bit little bit of volatility over three weeks,” he stated on CNBC’s “Squawk on the Avenue.”
Different commentators say any financial downturn will probably be temporary, and that falling shares are merely reflecting a decrease urge for food for riskier belongings like equities in tech corporations, which have seen the largest draw-downs; and cryptocurrencies, which have additionally taken heavy losses.
“Speculative belongings have been sliding not as a result of traders have decided the true value of tariffs, however as a substitute as a result of {the marketplace} has suffered one in every of its periodic bouts of danger on, danger off,” John Rekenthaler, a markets commentator and former vp on the Morningstar funding agency, wrote in a latest column.
Different traders aren’t shopping for it.
“With coverage uncertainty terribly elevated, the U.S. economic system has already begun to be negatively impacted,” Seema Shah, chief world strategist at Principal Asset Administration, stated in a notice to purchasers Thursday.
“The federal government seems to be following the ‘eat your greens earlier than you’ve dessert’ method, introducing import tariffs and federal worker job cuts within the first few weeks of the presidential time period, however no corresponding strikes to ease regulatory coverage. Thus far in 2025, the U.S. economic system has solely confronted headwinds and has not but benefitted from any tailwinds.”
The Nasdaq has already been in correction territory. The Dow Jones Industrial Common will not be, and stays about 300 factors away.
