Amid President Donald Trump’s heightening trade war, Wall Street witnessed a significant downturn, marking its first correction since 2023. The S&P 500 plummeted over 10% below its recent record, signaling a correction, a term used by investors to denote a substantial drop. Trump’s trade war escalation, including threats of imposing massive tariffs on European wines and alcohol, triggered this market turmoil.

On Thursday, the S&P 500 experienced a 1.4% decline, while the Dow Jones Industrial Average and the Nasdaq composite also recorded losses. The unpredictable fluctuations in the stock market have been intense, with the Dow swinging between gains and losses, reflecting the widespread uncertainty surrounding Trump’s economic policies and their impact on the economy.

Trump’s aggressive stance in the trade war was exemplified by his recent threat of imposing 200% tariffs on Champagne and other European wines in response to the European Union’s tariff on U.S. whiskey. This tit-for-tat escalation has already led to a decline in confidence among U.S. households and businesses, raising concerns about a potential decrease in consumer spending that could weaken the economy.

Despite the economic turbulence, there were some positive indicators on Thursday. Reports showed a lower-than-expected inflation rate at the wholesale level and a decrease in the number of U.S. workers applying for unemployment benefits. These signs suggest a relatively stable job market and moderate inflation, factors that could support continued consumer spending, a vital driver of economic growth.

In the midst of the market turmoil, certain stocks, particularly in the artificial intelligence sector, continued to slide. Companies like Palantir Technologies and Super Micro Computer faced significant losses. The broader market also witnessed dramatic shifts, with companies like Tesla and American Eagle Outfitters experiencing fluctuations in their stock prices.

Amidst the market downturn, Intel emerged as a standout performer, surging after appointing a new CEO with a strong background in the semiconductor industry. The overall market indices, including the S&P 500, the Dow Jones Industrial Average, and the Nasdaq composite, all closed lower.

In the global market scenario, indexes in Europe and Asia also experienced declines, albeit less severe than those on Wall Street. The bond market saw Treasury yields decrease, reflecting a cautious outlook on U.S. economic growth despite the absence of recession predictions.

The ongoing trade tensions and market volatility underscore the delicate balance between economic stability and uncertainty, with investors closely monitoring developments in the trade war and their repercussions on the financial landscape.