In the face of rising economic tensions, US equity indexes experienced a notable slump following a warning from President Donald Trump regarding substantial import duties on alcoholic products from the European Union. This decline coincided with a lackluster producer price index that failed to bolster investor confidence. The Nasdaq Composite saw a significant drop of 1.67%, closing at 17,351.3.
Meanwhile, the S&P 500 fell by 1.2%, ending at 5,531.7, and the Dow Jones Industrial Average experienced a decline of 1.1%, concluding at 40,877.5. This downward trend affected all sectors, with communications services, consumer discretionary, and real estate leading the list of decliners. President Trump’s declaration of a potential 200% tariff on European alcoholic product imports is a direct response to retaliatory tariffs announced by the EU earlier this week.
These tensions intensified following the activation of the US administration's 25% global tariffs on steel and aluminum imports that same day. In addition to tariff concerns, the producer price index reported no change in February, a stark contrast to the previously revised 0.6% increase recorded in January, according to the Bureau of Labor Statistics.
This figure fell short of analysts' expectations, which had projected a 0.3% growth rate, as compiled in a survey by Bloomberg. Year over year, producer prices rose by 3.2% in February, a decrease from the 3.7% increase noted in January and lower than the anticipated 3.3% growth rate. Matthew Martin, a Senior US Economist at Oxford Economics, provided insights into the report, indicating that the details were not as optimistic as the unchanged headline might imply.
"The two most volatile components, energy and trade services, were significant drags, whereas food prices have continued to escalate at a rapid rate. Additionally, core goods reported their largest monthly increase since January 2023, even prior to the bulk of tariffs taking effect," Martin noted in an email to MT Newswires. On the bond market front, US Treasury yields saw a decline, with the two-year yield dipping by 1.7 basis points to 3.98%.
In the commodities market, West Texas Intermediate crude oil futures fell by 1.2%, priced at $66.89 per barrel. In corporate news, technology giant Intel ($INTC) announced the appointment of Lip-Bu Tan as its new chief executive officer, effective March 18. Tan, a seasoned veteran in the semiconductor industry and formerly CEO of Cadence Design Systems ($CDNS), will take over from the interim co-CEOs, David Zinsner and Michelle Johnston Holthaus.
Following this announcement, Intel's shares surged by an impressive 15% during intraday trading, making it the top performer on both the S&P 500 and the Nasdaq..