Rob Wile is a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com.
The economic chaos unleashed by President Donald Trump has put the S&P 500 on the cusp of correction territory. The broad index of U.S. stocks declined about 0.9% as of Thursday afternoon. If the index closes at or below that level, it will have officially fallen 10% from the all-time high it reached last month.
It has now fully erased all its post-November election gains and is back to levels last seen in September. Among the companies seeing the biggest declines over the past three months are Tesla, down 40%; Nvidia, down 17%; and Amazon, Apple, and Microsoft, each down 15%. Corrections have historically occurred about every 10 to 15 months on average. But it had been an unusually long time since U.S. stocks had experienced one — nearly three years. It is not yet clear how serious this correction will be. Only about one in four correction events have ended up turning into bear markets, when a 20% decline from recent highs occurs. Bear markets historically take much longer to recover from, since they often accompany broader downturns in the U.S. economy. Trump’s tariffs threats and actions have ignited a trade war that many economists say threatens to undermine global economic stability. On Thursday, Trump said he would impose a 200% duty on EU wine and champagne imports in response to the region’s targeting of U.S. whiskey imports — itself a reaction to the president’s 25% steel and aluminum duties coming online. Meanwhile, the prospect of stagflation — meaning accelerating price increases alongside lackluster growth — has increased. Underlying data in two inflation reports this week suggest the Federal Reserve's preferred measure of price growth will show firmer price growth occurred in February, undercutting Trump's campaign promise to counter price increases. On Thursday, Treasury Secretary Scott Bessent said that the Trump administration is more focused on the long-term health of the economy and markets, rather than short-term movements. “I’m not concerned about a little bit of volatility over three weeks,” he said on CNBC’s “Squawk on the Street.” Other commentators say any economic downturn will be brief, and that falling stocks are merely reflecting a lower appetite for riskier assets like equities in tech firms, which have seen the biggest draw-downs; and cryptocurrencies, which have also taken heavy losses. 'Speculative assets have been sliding not because investors have determined the true cost of tariffs, but instead because the marketplace has suffered one of its periodic bouts of risk on, risk off,' John Rekenthaler, a markets commentator and former vice president at the Morningstar investment firm, wrote in a recent column. Other investors are not buying it. 'With policy uncertainty extraordinarily elevated, the U.S. economy has already begun to be negatively impacted,' Seema Shah, chief global strategist at Principal Asset Management, said in a note to clients Thursday. 'The government appears to be following the 'eat your vegetables before you have dessert' approach, introducing import tariffs and federal employee job cuts in the first few weeks of the presidential term, but no corresponding moves to ease regulatory policy. So far in 2025, the U.S. economy has only faced headwinds and has not yet benefitted from any tailwinds.' The Nasdaq has already been in correction territory. The Dow Jones Industrial Average is not, and remains about 300 points away.
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