Stocks Plunge: Trade Worries Spark Market Correction

Global stock prices fell sharply on Tuesday, with the S&P 500 index officially entering a correction. This means it’s more than 10% lower than its highest point. Investors are worried that trade issues might cause prices to rise and slow down growth after recent threats from U.S. President Donald Trump to impose heavy tariffs on European drinks if they don’t remove extra fees on American whiskey. Additionally, Trump recently raised tariffs on all imports of steel and aluminum.

While price data from the U.S. showed producers’ prices stayed the same and consumer prices went up more slowly than expected in February, these numbers didn’t calm investors. Many believe the trade disputes will lead to future problems. Tim Ghriskey from Ingalls & Snyder in New York noted that without the trade war worries, the market would likely be doing well.

On Wall Street, the S&P 500 dropped 77.78 points, or 1.39%, ending at 5,521.52. The Dow Jones also fell, down 537.36 points, or 1.30%, hitting 40,813.57, about 9.4% lower than its recent high. The Nasdaq Composite fell even more, down 345.44 points, or 1.96%, sitting at 17,303.01, which is more than 14% lower than its recent peak.

Market corrections like this happen regularly; since 1929, the S&P 500 has had corrections 56 times. Out of these, only 22 led to bear markets, which is when a market drops by 20% or more.

Globally, stock markets also faced declines, with MSCI’s index dropping 1.12% to 821.52. In Europe, the STOXX 600 index dipped 0.15% after a previous rise. The S&P 500 is now more than 6% down this year, while European stocks are faring better, gaining 6.5% as governments support defense spending and a possible peace deal in Ukraine.

U.S. Treasury bonds saw increased demand, causing their yields to drop. The yield on a 10-year Treasury note fell to 4.27%. Meanwhile, the U.S. dollar showed mixed results against other currencies—falling against the yen but gaining against the euro and Canadian dollar.

Oil prices dropped despite a previous rise due to lower gasoline stocks. U.S. crude prices fell by 1.67% to $66.55 a barrel, while Brent crude dropped 1.51% to $69.88.

Gold prices climbed, reaching close to $3,000 an ounce, driven by fears over tariffs and expectations for the U.S. Federal Reserve to lower interest rates. Spot gold rose to $2,982.84, and U.S. gold futures increased to $2,983.50.