The S&P 500 has officially entered correction territory, marking a significant shift in market sentiment
The index, widely regarded as a benchmark for the health of large U.S. companies, has fallen over 10% from its February 2025 peak.
This downturn follows a series of escalating trade tensions, with President Donald Trump announcing a 200% tariff on European alcoholic products in response to the European Union’s levies on American whiskey.
The correction reflects growing investor concerns over the potential economic fallout of these trade disputes. The Nasdaq Composite, another major index, had already entered correction territory earlier, signaling broader market unease. The Dow Jones Industrial Average also experienced a decline, marking its fourth consecutive day of losses.
Economists warn that the ongoing trade war could exacerbate fears of a recession, as businesses face rising costs and uncertainty. The Federal Reserve’s recent inflation reports suggest price growth remains elevated, adding to the challenges.
While corrections are not uncommon, they often serve as a wake-up call for investors. Historically, only a fraction of corrections evolve into bear markets, but the current environment of trade tensions and inflationary pressures has heightened concerns.
As markets navigate these turbulent waters, all eyes remain on policymakers and their next moves to stabilise the economy.