US stocks hover near correction territory as tariff risks mount

The S&P 500 has wiped out $5 trillion in market capitalization since that peak in February on concerns that President Donald Trump’s trade policies would stall economic growth

A bounce in US stocks on Wednesday proved temporary, as anxiety about the economic impact of a trade war offset optimism over data showing US wholesale inflation stagnated in February.

The S&P 500 fell 0.3% as of 10:17 a.m. in New York on Thursday, and approached correction territory for the second time this week. The technology-heavy Nasdaq 100 declined 0.6%. Both indexes gained Wednesday after a report showed consumer inflation eased more than expected. The S&P 500, at about 5,580, is approaching the 5,530 level that would mark a 10% decline from its February record high, the technical threshold for a correction.

The S&P 500 has wiped out $5 trillion in market capitalization since that peak in February on concerns that President Donald Trump’s trade policies would stall economic growth. The Nasdaq 100 has plunged more than 10% from a high last month as investors questioned lofty valuations of the biggest tech stocks.

Sentiment took a further hit Thursday after Trump threatened to impose a 200% tariff on wine, champagne and other alcoholic beverages from France and elsewhere in the European Union, the latest escalation in a brewing trade war.

“Another day of tariff uncertainty is weighing upon markets once again,” Steve Sosnick, chief strategist at Interactive Brokers, wrote in a note. “That said, over this week’s sessions, we have found support right around the level that would represent a 10% correction for the S&P 500.”

The S&P 500 has been struggling to regain its footing after snapping a two-year uptrend this week. Chart watchers say it needs to recapture its 200-day moving average, currently near 5,738. Some technical charts also show the benchmark is already at oversold levels. The index’s 14-day relative strength index is at 30, a level that is often considered a technical signal that a selloff has gone too far.

Investor sentiment is souring, and that could be good news for Wall Street traders betting on a rebound in the S&P 500. The closely watched bull-bear ratio from the American Association of Individual Investors survey fell to 0.3 in the week through Wednesday, the lowest level since September 2022. The last time the indicator was this low before then was in 2009, in the aftermath of the global financial crisis. Those prior instances have coincided with stretches of bear-market bottoms in US stocks.

Several Wall Street strategists including at Goldman Sachs Group Inc. and Citigroup Inc. turned more cautious on US stocks this week. However, JPMorgan Chase & Co. strategists said equities were pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise.

Among single stock movers, Intel Corp. shares jumped after the chipmaker named Lip-Bu Tan as its chief executive officer. On the other hand, American Eagle Outfitters Inc. sank after the apparel retailer forecast lower-than-expected operating income. And Deliveroo shares fell the most in more than two years after the UK food delivery firm forecast earnings that disappointed investors.