[New York Stock Market] Another Drop Amid Trump's "200% Tariff" Threat... US Treasury Says "No Concern Over Short-Term Volatility"

Trump Vows "Never to Back Down" on Tariff Policy
U.S. Treasury: "Focus on Real Economy Over Short-term Volatility"
February PPI Flat Month-on-Month... Inflation Concerns Ease

The three major indices of the U.S. New York stock market all closed lower on the 13th (local time). Investor sentiment froze again after U.S. President Donald Trump warned of imposing a 200% tariff bomb on alcoholic beverages from the European Union (EU). Although wholesale prices, following last month's retail prices, fell short of expectations, easing concerns about a rebound in inflation, it did not prevent a sell-off.

Reuters Yonhap News

On that day in the New York stock market, the Dow Jones Industrial Average (Dow Index), centered on blue-chip stocks, closed at 40,813.57, down 537.36 points (1.3%) from the previous trading day. The S&P 500 Index, focused on large-cap stocks, ended trading at 5,521.52, down 77.78 points (1.39%). It is analyzed that it has entered a technical correction phase after falling 10% from its peak. The Nasdaq Index, centered on technology stocks, closed at 17,303.01, down 345.44 points (1.96%).

By stock, Apple recorded a 3.36% decline. Tesla fell 2.99%. After President Trump warned that he would not tolerate boycotts and attacks on Tesla, whose CEO is Elon Musk, head of the Department of Government Efficiency (DOGE), Tesla had risen 7.59% just the previous day. Nvidia fell 0.14%. Boeing, the U.S. aircraft manufacturer, rose 0.28% after Citigroup released an analysis stating that the stock has a 32% upside potential.

The continuous tariff threats from Trump led to a decline in the stock market. On that day, President Trump warned via his social networking service (SNS) Truth Social that he would impose a 200% tariff on all alcoholic beverage products imported from EU countries. He stated, "This will be a great help to the wine and champagne business in the U.S." Earlier, the EU retaliated against the U.S.'s 25% tariffs on steel and aluminum, effective from the 12th, by imposing a 50% tariff on American whiskey as one of the countermeasures, prompting Trump to hint at further retaliation. During a meeting at the White House with NATO Secretary-General Mark Rutte, Trump told reporters, "We have been plundered for years, but we will no longer be taken advantage of," and said he would "never back down" on tariff policies.

Jed Ellebrook, portfolio manager at Argent Capital Management, said, "This tariff war is not weakening but intensifying," adding, "It adds unpredictability and uncertainty, clearly having a negative impact on the stock market."

U.S. Treasury Secretary Scott Bessent expressed that he would not be swayed by the short-term market volatility caused by tariff concerns. In an interview with CNBC, Secretary Bessent said, "We are focused on the real economy," and "I am not worried about a little market volatility over the next three weeks." He emphasized, "With appropriate policies, the foundation will be laid for real income growth, job creation, and asset growth."

Although the February wholesale price index released that morning eased inflationary pressures, concerns over tariffs overshadowed the market, preventing stock prices from rising. According to the U.S. Department of Labor, the Producer Price Index (PPI) for February this year remained flat compared to the previous month. It fell significantly short of the January figure (0.6%) and expert forecasts (0.3%). The decline was largely due to a 0.2% drop in service prices compared to the previous month. The PPI rose 3.2% year-over-year, also below the previous month's figure (3.7%) and market expectations (3.3%). Following the Consumer Price Index (CPI) for February released the day before, the slowdown in PPI brought relief to the market, which had been worried about entrenched high inflation. However, concerns remain that the tariff policies continuously announced by President Donald Trump will be fully reflected in the economy, leading to rising import prices and consumer price increases.

Paul Stanley, Chief Investment Officer (CIO) at Granite Bay Wealth Management, said, "Thursday's (13th) inflation indicators look back at the past, but the real worry is the inflationary effect that tariff policies could cause," analyzing, "This will be an unpredictable wild card for the market and the U.S. Federal Reserve (Fed)."

The Fed is expected to keep the benchmark interest rate at the current 4.25?4.5% level at the Federal Open Market Committee (FOMC) regular meeting scheduled for the 18th?19th. It is likely to monitor inflation, growth rates, and employment indicators while assessing the impact of President Trump's trade policies in the future.

Employment appeared favorable. According to the U.S. Department of Labor, new unemployment claims for the week of March 2?8 decreased to 220,000, down from the revised figure of 222,000 the previous week and below market expectations of 226,000.

Government bond yields are declining. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 4 basis points (1bp = 0.01 percentage points) from the previous day to 4.27%, while the 2-year Treasury yield, sensitive to monetary policy, dropped 3 basis points to 3.95%.