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By Gabe Whisnant and Sonam Sheth
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A key stock market index dropped more than 10 percent from its last peak on Thursday, plunging it into correction territory.
The Context
A 10 percent drop qualifies as a "correction," a Wall Street term used to indicate pessimistic investor sentiment. Thursday's sell-off came as part of a broader stock market decline amid President Donald Trump's trade war and tariff threats.
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What To Know
The S&P 500 dropped 1.4 percent on Thursday, falling 10.1 percent from a peak it reached less than a month ago. It was the index's first correction since 2023 and came following Trump's threat to impose hefty tariffs on European wines and alcohol, further escalating tensions between the U.S. and its key trade partners.
The Dow Jones Industrial Average tumbled 537 points, or 1.3 percent, while the Nasdaq composite slid 2 percent.
Markets have been experiencing wild volatility, with the Dow swinging between slight gains and a 689-point drop over the course of Thursday's session.
On Sunday, Trump said the U.S. is going through a transitional period with respect to his trade policy.
When Fox News' Maria Bartiromo asked Trump on Sunday whether "rising worries" about his back-and-forth on tariffs could lead to a slowdown," the president responded: "I hate to predict things like that. There is a period of transition, because what we're doing is very big."
"We're bringing wealth back to America," he said. "That's a big thing. And there are always periods of it takes a little time. I think it should be great for us."
The president also acknowledged that the U.S. will experience some volatility as a result of his policies, telling Bartiromo the country is "going to have a disruption, but we're okay with that."
Trump's latest escalation came on Thursday, when he threatened to impose 200 percent tariffs on Champagne and other European wines unless the European Union rescinds a "nasty" tariff it imposed on American whiskey.
The EU's tariff was in response to U.S. tariffs on European steel and aluminum.
What People Are Saying
The White House said in a statement earlier this week: "Since President Trump was elected, industry leaders have responded to President Trump's America First economic agenda of tariffs, deregulation, and the unleashing of American energy with trillions in investment commitments that will create thousands of new jobs. President Trump delivered historic job, wage, and investment growth in his first term, and is set to do so again in his second term."
What Happens Next
The U.S.'s reciprocal tariffs on key products will go into effect on April 2.
Reporting by The Associated Press contributed to this story.
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