The U.S. stock market is falling Thursday, even after getting a double-shot of encouraging news on the economy. President Donald Trump keeps upping the stakes in his trade war, with his most recent threat to tax wines and other alcohol coming from Europe.
The S&P 500 was down 0.9 per cent in midday trading, coming off a dizzying stretch where it set a record and then briefly tumbled as much as 10 per cent from the mark within just a few weeks. The Dow Jones Industrial Average was down 324 points, or 0.8 per cent, as of 11:30 a.m. Eastern time, and the Nasdaq composite was 1.3 per cent lower.
The swings for stocks have been coming not just day to day but also hour to hour, and the Dow hurled between a slight gain and a drop of more than 330 points during Thursday morning’s trading.
The turbulence is because of uncertainty about how much pain Trump will let the economy endure through tariffs and other policies in order to reshape the country and world as he wants. He’s said he wants manufacturing jobs back in the United States, along with a smaller U.S. government workforce and other fundamental changes.
Trump’s latest escalation came Thursday when he threatened 200 per cent tariffs on Champagne and other European wines, unless the European Union rolls back a “nasty” tariff it announced on U.S. whiskey. The European Union announced that move on Wednesday, in response to U.S. tariffs on European steel and aluminum that kicked in earlier in the day.
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U.S. households and businesses have already reported drops in confidence because of all the uncertainty about which tariffs will stick from Trump’s barrage of on-again, off-again announcements. That’s raised fears about a pullback in spending that could sap energy from the economy. Some U.S. businesses say they’ve already begun to see a change in their customers’ behaviour because of the uncertainty.
A particularly feared scenario for the overall economy is one where its growth stagnates but inflation stays high because of tariffs. Few tools are available in Washington to fix what’s called “stagflation.”
Good news came on both those economic fronts Thursday.
One report showed inflation at the wholesale level last month was milder than economists expected. It followed a similarly encouraging report from the prior day on inflation that U.S. consumers are feeling.
But “the question for markets is whether good news on the inflation front can make itself heard above the noise of the ever-changing tariff story,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
A separate report, meanwhile, said fewer U.S. workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market remains relatively solid overall. If that can continue, it could allow U.S. consumers to keep spending, and that’s the main engine of the economy.
On Wall Steet, some stocks connected to the artificial-intelligence industry were resuming their slide and weighing on stock indexes. Palantir Technologies, which offers an AI platform for customers, sank 5.4 per cent. Super Micro Computer, which makes servers, lost 5.2per cent. Nvidia initially fell but crawled back to a gain of 0.4 per cent.
Such stocks have been under the most pressure in the U.S. stock market’s recent sell-off after critics said their prices shot too high in the frenzy around AI.
Other areas of the market that had also been riding big earlier momentum have seen their fortunes swing drastically. Elon Musk’s Tesla fell 4.9 per cent following a rare back-to-back gain, and it’s down more than 40 per cent so far in 2025.
American Eagle Outfitters was swinging between gains and losses after the retailer said “less robust demand and colder weather” has held back its performance recently. It forecasted a dip in revenue for the upcoming year, but it also delivered a stronger profit report for the latest quarter than analysts expected. Its stock was most recently down two per cent.
On the winning side of Wall Street was Intel, which jumped 14.9 per cent after naming former board member and semiconductor industry veteran Lip-Bu Tan as its CEO. Tan, 65, will take over the daunting job next week, more than three months after Intel’s previous CEO, Pat Gelsinger, abruptly retired amid a deepening downturn at the once-dominant chipmaker.
In the bond market, Treasury yields lost an early gain to edge lower. The yield on the 10-year Treasury fell to 4.30 per cent from 4.32 per cent. The yield has been mostly sinking since January, when it was approaching 4.80 per cent, as traders and economists have ratcheted back their expectations for U.S. economic growth.
While few are predicting an imminent recession, particularly with the job market remaining relatively solid, recent reports have shown a souring of confidence among U.S. consumers and companies.
In stock markets abroad, indexes fell across much of Europe and Asia, but the moves were relatively modest.