The Nasdaq plunged 345.44 points (2%) to 17,303.01, the S&P 500 slumped 77.78 points (1.4%) to 5,521.52 and the Dow dove 537.36 points (1.3%) to 40,813.57.
The EU planned tariffs on $28 billion of U.S. goods in response to U.S. steel and aluminum tariffs, prompting Trump to threaten reciprocal measures. He later warned of a 200% tariff on EU alcoholic products after a 50% tariff on whisky.
Traders largely ignored a Labor Department report showing U.S. producer prices were flat in February, defying expectations of a 0.3% increase. The annual growth rate slowed to 3.2% from 3.7% in January, below the anticipated 3.3% dip. Labor Department released a report showing a modest decrease by first-time claims for U.S. unemployment benefits in the week ended March 8th. "Financial markets are paying more attention to announcements from the White House about tariffs and job cuts than the hard numbers," said Bill Adams, Chief Economist for Comerica Bank.
Computer hardware stocks substantially moved downwards, dragging the NYSE Arca Computer Hardware Index down by 2.9%. Retail stocks were significantly weak with the Dow Jones U.S. Retail Index tumbling by 2.6% to its lowest closing level in well over four months. Software stocks too were considerably weak, as reflected by the 2.3% slump by the Dow Jones U.S. Software Index. Housing, brokerage and commercial real estate stocks were notably weak while gold stocks were among the few groups to buck the downtrend amid a sharp increase by the price of the precious metal. Adobe (ADBE) led the sector lower, plunging by 13.9% after reporting better than expected first quarter earnings but providing disappointing second quarter guidance.
Asia-Pacific stocks moved mostly lower. Japan's Nikkei 225 Index edged down by 0.1%, China's Shanghai Composite Index fell by 0.4% and Hong Kong's Hang Seng Index slid by 0.6%. Most European stocks moved downwards. The French CAC 40 Index and the German DAX Index declined by 0.6% and 0.5%, respectively, although the U.K.'s FTSE 100 Index closed just above the unchanged line.
In the bond market, treasuries moved higher over the course of the session after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.4 bps to 4.27% after reaching a high of 4.35%.