U.S. Stocks Move Sharply Lower, S&P 500 Enters Correction Territory

Stocks moved sharply lower over the course of the trading day on Thursday, more than offsetting the gains posted during Wednesday’s session. The major averages tumbled to six-month closing lows, with the S&P 500 entering correction territory more than 10 percent below February’s record highs.

The major averages ended the day off their worst levels but still firmly negative. The Nasdaq plunged 345.44 points or 2.0 percent to 17,303.01, the S&P 500 slumped 77.78 points or 1.4 percent to 5,521.52 and the Dow dove 537.36 points or 1.3 percent to 40,813.57.

The sell-off on Wall Street came amid ongoing concerns about President Donald Trump’s trade policies after he suggested the U.S. would respond to the European Union’s countermeasures with even more tariffs.

With the EU saying it would impose tariffs on approximately $28 billion worth of U.S. goods in response to U.S. tariffs on steel and aluminum imports, Trump indicated the U.S. would react with reciprocal tariffs

“Whatever they charge us with, we’re charging them,” Trump told reporters on Wednesday. “Nobody can complain about that.”

Trump later threatened in a post on Truth Social to impose a 200 percent tariff on all wines, champagnes and alcoholic products coming out of the EU in response to a “nasty” 50 percent tariff on whisky.

Meanwhile, traders largely shrugged off a Labor Department report showing producer prices in the U.S. were unexpectedly flat in the month of February.

The Labor Department said its producer price index for final demand was unchanged in February after climbing by an upwardly revised 0.6 percent in January.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.4 percent growth originally reported for the previous month.

The report also said the annual rate of growth by producer prices slowed to 3.2 percent in February from an upwardly revised 3.7 percent in January.

The annual rate of producer price growth was expected to dip to 3.3 percent from the 3.5 percent originally reported for the previous month.

A separate report released by the Labor Department unexpectedly showed a modest decrease by first-time claims for U.S. unemployment benefits in the week ended March 8th.

“Financial markets are paying more attention to announcements from the White House about tariffs and job cuts than the hard numbers,” said Bill Adams, Chief Economist for Comerica Bank.

Sector News

Computer hardware stocks showed a substantial move to the downside, dragging the NYSE Arca Computer Hardware Index down by 2.9 percent to a nearly four-month closing low.

Significant weakness was also visible among retail stocks, with the Dow Jones U.S. Retail Index tumbling by 2.6 percent to its lowest closing level in well over four months.

Software stocks also saw considerable weakness on the day, as reflected by the 2.3 percent slump by the Dow Jones U.S. Software Index.

Adobe (ADBE) led the sector lower, plunging by 13.9 percent after reporting better than expected first quarter earnings but providing disappointing second quarter guidance.

Housing, brokerage and commercial real estate stocks also saw notable weakness, while gold stocks were among the few groups to buck the downtrend amid a sharp increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday. Japan’s Nikkei 225 Index edged down by 0.1 percent, China’s Shanghai Composite Index fell by 0.4 percent and Hong Kong’s Hang Seng Index slid by 0.6 percent.

Most European stocks also moved to the downside on the day. The French CAC 40 Index and the German DAX Index declined by 0.6 percent and 0.5 percent, respectively, although the U.K.’s FTSE 100 Index closed just above the unchanged line.

In the bond market, treasuries moved higher over the course of the session after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.4 basis points to 4.274 percent after reaching a high of 4.353 percent.

Looking Ahead

The latest developments on the tariff front are likely to be in focus on Friday, while traders are also likely to keep an eye on the University of Michigan’s preliminary report on consumer sentiment and inflation expectations in March.

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