Stocks fell on Thursday as investors digested President Donald Trump's latest tariff threats while they pored over new U.S. inflation figures.

The Dow Jones Industrial Average fell 254 points, or 0.6%. The S&P 500 fell 0.7%, and the Nasdaq Composite dropped 1.2%.

Trump used his Truth Social platform to threaten a 200% tariff on all alcohol products coming from countries in the European Union in retaliation for the bloc's 50% tariff on whiskey. "This would be great for the Wine and Champagne business in the U.S.," he wrote.

Concerns over U.S. trade policy have hurt stocks this week.

The S&P 500 and Nasdaq are on track to lose 3.3% and 3.7% this week, respectively. The Dow fell 3.6% in the period, heading for its worst week since March 2023. The broad market index briefly dipped into correction territory on Tuesday, down 10% from a record set in February.

Investors, however, got more encouraging inflation data on Thursday. The February producer price index — which measures the cost of producing consumer goods and is a good indicator of inflationary pressures — was flat for the month, compared with an increase expected. That, along with a weaker-than-expected February consumer price index reading, may have helped ease traders' concerns about the direction of the economy and the impact of tariffs on inflation.

While market strategists have been watching for a technical bounce after the recent selloff, some say the latest inflation data may not be enough to cause a substantial recovery. Concerns over Trump's trade policies remain a major drag on investor sentiment, and that raises questions about how the Federal Reserve might proceed with interest rates.

"We still believe the Fed's next move will be lower, but it's hard to have much conviction with the impact of tariffs still uncertain," said Scott Helfstein, chief investment strategist at Global X. "The key question is whether tariffs will have a bigger impact on growth or prices. In recent weeks, the interest rate market has signaled that weaker growth is a bigger concern with three cuts now priced in for this year." (Newsmaker23)

Source: CNBC