The Dow Jones Industrial Average fell again on Wednesday as rising tensions between the U.S. and its major trading partners continued to rattle investors.
The blue-chip index fell 287 points, or 0.7%. The S&P 500 traded nearly flat, while the Nasdaq Composite rose 0.6%.
President Donald Trump's steel and aluminum tariffs went into effect Wednesday, and Canada said it would slap 25% retaliatory duties on more than $20 billion worth of U.S. goods. The European Union also responded swiftly, pledging to impose retaliatory tariffs on 26 billion euros ($28.33 billion) worth of U.S. imports starting in April.
Stocks have been under pressure as traders worry that the escalating tensions could trigger a U.S. recession. One reason for the recent selloff is concern that President Donald Trump's volatile trade policies will raise inflation and slow growth, also known as stagflation.
This week alone, the Dow, S&P 500 and Nasdaq have all fallen more than 3%. The S&P 500 briefly dipped into correction territory on Tuesday, down 10% from its record set in February. Over the past month, the S&P 500 has lost nearly 8%, while the Dow and Nasdaq have fallen 6.6% and 11.3%, respectively.
"We're not surprised that the market is down. Obviously, the U.S. equity market has been very strong over the last two years. It's reasonable to expect a correction," said Dave Grecsek, managing director of investment strategy and research at Aspiriant Wealth Management. "But I think once we get through this — we're in the very early stages of this major fiscal policy shift — there will be better news."
Soft CPI
The consumer price index, a broad measure of costs across the U.S. economy, rose 0.2% over the month, bringing the annual inflation rate to 2.8%. That was below Dow Jones estimates of 0.3% and 2.9%, respectively. Core CPI, which excludes volatile food and energy prices, rose 0.2% for the month and 3.1% for the past 12 months, both below expectations.
"This reading will do a little bit to soften this stagflation narrative, and it will restore some policy flexibility from the Fed," Grecsek added. "If this inflation number is higher, some of these concerns will be much more pronounced, such as the Fed not being able to respond if the economy continues to weaken."(Newsmaker23)
Source: CNBC
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