The stock sell-off resumed Thursday after a mild respite in the prior session.
Major indexes traded lower as Trump threatened more tariffs on imports from Europe.
The tariff noise drowned otherwise upbeat news of back-to-back tame inflation reports.
The market got two surprisingly tame inflation readings this week, but the upbeat data is getting drowned out by more trade war noise from the White House on Thursday.
Stocks slid a day after investors got a mild boost from a cooler-than-expected consumer inflation report on Wednesday. Wholesale inflation was also less than expected, with the producer price index flat in February compared to expectations for it to increase.
But, Trump keeps escalating his trade war, with the president rattling markets again on Thursday with a post on Truth Social that said he would slap a 200% tariff on all wines, champagne, and other alcohol imports from the EU if the bloc didn’t repeal a 50% tariff on US whisky exports.
Meanwhile, Treasury Secretary Scott Bessent reiterated the administration’s position that it is willing to tolerate market volatility as it pursues policies meant to boost the broader economy.
“We’re focused on the real economy. Can we create an environment where there are long-term gains in the market and long-term gains for the American people?” Bessent said on CNBC. “I’m not concerned about a little bit of volatility over three weeks.”
All three major indexes traded lower on Thursday. Long-dated bond yields also climbed higher.
Here’s where indexes stood around 10:30 a.m. ET:
While Trump’s new tariff target is a relatively small portion of all EU imports, it’s another sign of a spiraling trade war for investors, who just endured a $5 trillion sell-off in stocks as Trump pushed ahead with his latest round of tariffs on Canada, Mexico, and China.
The news was enough for stock traders to brush off the latest PPI reading, which showed that producer prices remained flat in February, down from the 0.3% growth that economists were expecting. The figures came out after CPI showed that consumer prices rose a less-than-expected 2.8% year-over-year in February.
“The economy entered 2025 with a downward inflation trajectory. However, the outlook for inflation depends more on tariffs, deportations, and DOGE than the backward-looking data releases right now,” Bill Adams, the chief economist at Comerica Bank, said in a note.
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