Stock Market Today: S&P 500 Enters Correction, Dow Drops 500 Points Amid Trump’s Latest Tariff Threats
By Karen Friar, Ines Ferré, and Josh Schafer
Updated March 13, 2025
U.S. stock markets tumbled on Thursday as growing economic concerns, escalating trade tensions, and political uncertainties shook investor confidence. The S&P 500 officially entered correction territory for the first time since its February peak, while the Dow Jones Industrial Average (DJIA) plunged nearly 550 points. This downturn reflects increasing anxiety over President Donald Trump’s renewed tariff threats and the looming risk of a U.S. government shutdown.
S&P 500 Officially in Correction
The S&P 500 index fell 1.4%, marking a decline of more than 10% from its record high hit on February 19. This drop qualifies the index as having entered a “correction,” a technical term used when a market retracts by 10% or more after reaching recent highs. Meanwhile, the Nasdaq Composite, which had already dipped into correction territory last week amid concerns over technology sector valuations, lost nearly 2% in Thursday’s trading. The DJIA decreased by 1.3%, slipping nearly 550 points.
Markets have been volatile throughout the week, reacting to a stream of headline-making developments. However, Wall Street remains particularly unsettled by the president’s aggressive trade policies, which have intensified in recent days.
President Trump’s Escalating Trade Offensive
On Thursday, President Trump announced new threats to impose tariffs on imports from the European Union and Canada. Most notably, he proposed a 200% tariff on EU wines and spirits as retaliation against the EU’s tariffs on U.S. steel and aluminum. Speaking at the White House, Trump vowed not to “bend” on his trade stance, signaling a broadening of his trade war. These announcements have further unnerved investors who are wary about the potential impact of expanding tariffs on global supply chains and corporate earnings.
Senate Democrats have also added to the political uncertainty by declaring their intention to block a Republican spending bill designed to avert a government shutdown, heightening fears that a U.S. government halt could start as soon as this weekend.
Inflation Data and Economic Signals
Adding to the cautious market mood was the release of wholesale inflation data earlier on Thursday. The Producer Price Index (PPI) showed no change in prices in February, contrary to expectations of a 0.3% monthly increase. Year-over-year, the PPI was up 3.2%, slightly below the consensus forecast of 3.3%. While this data hints at a modest easing in inflationary pressures, investors remain wary of how persistent inflation and interest rate policies might evolve in the coming months.
Market Outlook: Corrections Are Frequent, but Bear Markets Less So
Despite entering correction territory, market strategists urge investors not to overreact. According to Ryan Detrick, chief markets strategist at Carson Group, 10% market corrections are relatively common and do not always lead to bear markets—defined as declines of 20% or more. Historical analysis since World War II shows that only 12 of 48 corrections progressed into bear markets, meaning roughly 75% of corrections recover without further steep losses.
“Maybe we go into a correction, but we do not see a bear market coming,” Detrick said. “Early in the post-election year, choppiness is normal and that’s kind of what’s happening.”
Analysts Lower S&P 500 Targets but Remain Optimistic on Fundamentals
While some Wall Street firms are revising their S&P 500 year-end targets downward, the underlying earnings outlook remains healthy. Yardeni Research recently lowered its 2025 year-end S&P 500 target from 7,000 to 6,400. However, this adjustment reflects a more cautious valuation multiple rather than a deterioration in corporate profits or economic fundamentals.
“We still think earnings growth is going to be good,” Yardeni’s chief markets strategist Eric Wallerstein told Yahoo Finance. “There hasn’t been a lot that’s actually fundamentally changed about the economy. It’s more so just uncertainty is weighing on multiples.”
SoFi’s head of investment strategy, Liz Young Thomas, also noted that the recent market rerating seems tied more to sentiment and uncertainty surrounding trade policies and political risks rather than a fundamental shift in company earnings or growth prospects.
Conclusion
Thursday’s market decline, highlighted by the S&P 500’s entry into correction and the Dow’s steep drop, underscores the sensitive mood permeating Wall Street amid a complex backdrop of trade conflicts, political brinkmanship, and mixed economic signals. While corrections are typical aspects of market cycles, investors will be closely watching forthcoming trade negotiations, government funding decisions, and corporate earnings to gauge whether the current volatility signals a deeper downturn or a temporary pause in the ongoing market rally.
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