Wall Street slides after Trump escalates tariff threats against EU

By Johann M Cherian and Pranav Kashyap

(Reuters) -U.S. stock indexes fell on Thursday following President Donald Trump's threat to impose additional tariffs on imports from the European Union, although data showing cooling inflation offered some respite.

In his latest trade salvo, Trump said he would levy 200% duty on European beverage imports unless the EU removes surcharges on U.S. whiskey. He had previously threatened to penalize the bloc if it imposed retaliatory tariffs on American goods next month.

U.S. beverage makers were mixed. Brown-Forman added 2%, while Molson Coors lost 0.9% and Constellation Brands dropped 0.7%.

Speaking on the market impact of tariffs, Treasury Secretary Scott Bessent said in an interview that he was not concerned about Wall Street's recent volatility and that an economic "detox" does not have to be a recession.

Markets were roiled earlier this week by Trump's unpredictable trade restrictions, stoking concerns that an escalating trade conflict on multiple fronts could spur domestic inflation and potentially hinder growth.

"Bessent's comments are basically telling you... there is a plan and it's not as haphazard as it seems. But the market doesn't know what the exact policy is going to be," said Thomas Hayes, chairman at Great Hill Capital LLC.

The trade restrictions have unsettled investors, leading brokerages to lower their projections for U.S. equities, while several companies have issued cautious forecasts.

Dollar General forecast annual comparable sales growth largely below estimates. However, its shares gained 5.1% on its upbeat quarterly results.

A majority of the S&P 500 sub-sectors were in the red, led by a 2.7% drop in consumer discretionary as Tesla slid 5.6%.

At 11:43 a.m. ET the Dow Jones Industrial Average fell 370.69 points, or 0.89%, to 40,980.24, the S&P 500 lost 54.89 points, or 0.98%, to 5,544.41 and the Nasdaq Composite lost 253.93 points, or 1.44%, to 17,394.52.

The domestically focused Russell 2000 index lost 1.2%.

The S&P 500 was on course to confirm a correction, dropping about 10% from its recent record high and on the brink of its longest weekly losing streak in seven months.

Offering investors some hope on the economy's resilience, data showed producer prices were unexpectedly unchanged in February. A separate weekly report pointed to fewer-than-expected jobless claims.

However, worries that the trend could be short-lived prevailed, with traders expecting the U.S. Federal Reserve to lower borrowing costs by nearly 75 basis points in the second half of the year, according to data compiled by LSEG.

Markets were also on edge as the deadline to pass a funding bill in the U.S. Senate approached. If it goes through, the bill will keep the U.S. government operational through September 30.

Among other stocks, Intel jumped 14.8% after the beleaguered chipmaker appointed industry veteran Lip-Bu Tan its chief executive officer.

Adobe dropped 12.9% after the Photoshop-maker forecast quarterly revenue in line with estimates.

Shares of truck- and parts-makers such as Paccar and Cummins fell 2.9% and 2.8%, respectively, after the Environmental Protection Agency launched efforts to undo the previous administration's vehicle-emissions rules.

Declining issues outnumbered advancers by a 2.26-to-1 ratio on the NYSE, and by a 2.3-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and 19 new lows, while the Nasdaq Composite recorded 11 new highs and 183 new lows.

(Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Pooja Desai)