NEW YORK (AP) — Wall Street’s sell-off is accelerating Thursday after President Donald Trump upped the stakes in his trade war by threatening huge taxes on European wines and alcohol. Not even a double-shot of good news on the U.S. economy could stop the bleeding.
The S&P 500 was down 1.2% in afternoon trading, caught in a dizzying, battering stretch that's driven the index roughly 10% below its record, which was set just a few weeks ago. Wall Street calls such steep drops a “correction,” and if the index finishes the day below 5,529, it would be the first for the U.S. stock market since 2023.
The Dow Jones Industrial Average was down 507 points, or 1.2%, as of 2:15 p.m. Eastern time, and the Nasdaq composite was 1.6% lower.
The swings for stocks have been coming not just day to day but also hour to hour, and the Dow hurtled between a slight gain and a drop of 689 points during Thursday's trading.
The turbulence is a result 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. The president has 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% tariffs on Champagne and other European wines, unless the European Union rolls back a “nasty” tariff announced on U.S. whiskey. The European Union unveiled that move on Wednesday, in response to U.S. tariffs on European steel and aluminum.
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' behavior because of the uncertainty.
A particularly feared scenario for the 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.” If the Federal Reserve were to cut interest rates to boost the economy, for example, that could also push inflation higher.
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 resumed their slide and weighed on stock indexes. Palantir Technologies, which offers an AI platform for customers, sank 4.5%. Super Micro Computer, which makes servers, lost 6%. Nvidia swung between gains and losses before rising 0.7%.
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 3.2% following a rare back-to-back gain, and it's down more than 40% so far in 2025.
American Eagle Outfitters dropped 4% 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, though it also delivered a stronger profit report for the latest quarter than analysts expected.
On the winning side of Wall Street was Intel, which jumped 14.9% 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 sink lower. The yield on the 10-year Treasury fell to 4.26% from 4.32%. The yield has been mostly dropping since January, when it was approaching 4.80%, as traders and economists have ratcheted back their expectations for U.S. economic growth.
While few are predicting a 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.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated. The move comes amid a fraught time for the central bank, with hiring sluggish and yet inflation stuck above the Fed’s 2% target. Compounding its challenges, the central bank is navigating without much of the economic data it typically relies on from the government. The Fed has signaled it may reduce its key rate again in December but the data drought raises the uncertainty around its next moves. Fed Chair Jerome Powell told reporters that there were “strongly differing views” at the central bank's policy meeting about to proceed going forward.
The Federal Reserve will almost certainly cut its key interest rate on Wednesday and could signal it expects another cut in December as the central bank seeks to bolster hiring. A cut Wednesday would be the second this year and could benefit consumers by bringing down borrowing costs for mortgages and auto loans. Since Fed chair Jerome Powell strongly signaled in late August that rate cuts were likely this year, the average 30-year mortgage rate has fallen to about 6.2% from 6.6%. Still, the Fed is navigating an unusual period for the U.S. economy and its future moves are harder to anticipate than is typically the case.
Stocks are rallying toward more records ahead of a week packed with potentially market-moving events. The S&P 500 rose 1% Monday. The Dow Jones Industrial Average added 224 points, and the Nasdaq composite jumped 1.7%. Stocks also climbed in Asia ahead of a meeting on Thursday between the heads of the United States and China. The hope is that the talks could clear rising tensions between the world’s two largest economies. This upcoming week will feature profit reports from some of Wall Street's most influential companies and a meeting by the Federal Reserve on interest rates. Gold fell back toward $4,000 per ounce.
U.S. and Chinese officials say a trade deal between the world’s two largest economies is drawing closer. The sides have reached an initial consensus for President Donald Trump and Chinese leader Xi Jinping to aim to finalize during their high-stakes meeting Thursday in South Korea. Any agreement would be a relief to international markets. Trump's treasury secretary says discussions with China yielded preliminary agreements to stop the precursor chemicals for fentanyl from coming into the United States. Scott Bessent also says Beijing would make “substantial” purchases of soybean and other agricultural products while putting off export controls on rare earth elements needed for advanced technologies.
Some seniors say the Social Security Administration's cost-of-living adjustment won’t help much in their ability to pay for their daily expenses. The agency announced Friday the annual cost-of-living adjustment will go up by 2.8% in 2026, translating to an average increase of more than $56 for retirees every month. Eighty-year-old Florence, South Carolina, resident Linda Deas says it does not match the current "affordability crisis.” The benefits increase will go into effect for Social Security recipients beginning in January. Friday’s announcement was meant to be made last week but was delayed because of the federal government shutdown. Recipients got a 2.5% COLA boost in 2025 and a 3.2% increase in 2024.
Wall Street is heading for records after an update said U.S. households are feeling a bit less pain from inflation than feared. The S&P 500 climbed 1% Friday and was on track to top its all-time high set earlier this month. The Dow Jones Industrial Average jumped 529 points, and the Nasdaq composite rose 1.3%. Both are also heading toward records. The inflation data could clear the way for the Federal Reserve to keep cutting interest rates in hopes of helping the slowing job market. A strong earnings reports from Ford Motor and continued gains for AI stars also drove stocks higher.
Federal Reserve Chair Jerome Powell says that a sharp slowdown in hiring poses a growing risk to the U.S. economy.
Three researchers who probed the process of business innovation have won the Nobel memorial prize in economics for explaining how new products and inventions promote economic growth and human welfare, even as they leave older companies in the dust.
U.S. stocks are rising and recovering some of their sell-off from Friday. The S&P 500 climbed 1.6%.
President Donald Trump says “there seems to be no reason” to meet with Chinese leader Xi Jinping as part of an upcoming trip to South Korea after China restricted exports of rare earths needed for American industry. The Republican president suggested Friday he was looking at a “massive increase” of import taxes on Chinese products in response to Xi’s moves. Trump says one of the policies the U.S. is calculating is "a massive increase of Tariffs on Chinese products coming into the United States." A monthslong calm on Wall Street was shattered, with U.S. stocks falling on the news. The Chinese Embassy in Washington hasn't responded to an Associated Press request for comment.
