US stocks down slightly amid trade war and looming government shutdown
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City.
(NEW YORK) — U.S. stocks dropped slightly lower early Thursday, after a reprieve for the S&P and Nasdaq a day earlier amid President Donald Trump’s trade war.
The Dow Jones Industrial Average fell 150 points in early trading, or 0.4%, while the S&P 500 ticked down 0.25%. The tech-heavy Nasdaq declined 0.35%.
Trading opened minutes after Trump threatened a 200% tariff on champagne and other alcohol products from the European Union, escalating a global trade war that has roiled markets.
A continued back-and-forth over international tariffs is hanging over the U.S. economy, along with a looming government shutdown with a deadline on Friday.
Federal officials said Wednesday that consumer prices climbed 2.8% in February over the same year-earlier month, meaning inflation cooled more than economists expected.
After initially modest gains, the Dow Jones Industrial Average closed on Wednesday down about 0.2%, while the S&P 500 climbed 0.5%. The tech-heavy Nasdaq increased 1.2%.
This is a developing story. Please check back for updates.
(NEW YORK) — Consumer attitudes soured in March alongside slumping markets and growing concern about a possible recession, University of Michigan survey data on Friday showed. Sentiment worsened more than economists expected.
The figure marked the third consecutive month of dampening consumer attitudes, data showed.
Expectations about future economic conditions worsened in a slew of key areas, including personal finances, labor markets, inflation and stock markets, the survey said.
Consumer sentiment soured among both Democrats and Republicans, though it dropped more among Democrats, data showed.
On Thursday, the S&P 500 closed down more than 10% since a peak attained last month, meaning the decline officially qualified as a market correction. It marked the index’s first correction since October 2023.
The major stock indexes recovered some losses in early trading on Friday.
Consumers expect the inflation rate to rise to 4.9% over the next year, according to the survey, which marks a significant jump in year-ahead inflation expectations compared to survey results in February.
The current inflation rate stands at 2.8%, nearly a percentage point higher than the Federal Reserve’s target of 2%.
President Donald Trump’s tariffs last week set off an escalating global trade war. The U.S. slapped 25% tariffs on Mexico and Canada, some of which were delayed. Trump also imposed a 10% tariff on China, doubling taxes on Chinese imports to 20%.
Trump’s 25% tariffs on all imported steel and aluminum products took effect on Wednesday.
The array of duties on imported goods prompted retaliatory measures from China, Canada and the European Union.
Tariffs of this magnitude are widely expected to increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers.
Higher prices and looming economic uncertainty could scare off consumers, experts previously told ABC News. Consumer spending accounts for about two-thirds of U.S. economic activity.
Goldman Sachs last week hiked its odds of a recession from 15% to 20%. Moody’s Analytics earlier this week pegged the probability of a recession at 35%.
This is a developing story. Please check back for updates.
(WASHINGTON) — The Federal Reserve on Wednesday will announce its latest decision setting the level of interest rates, just days after President Donald Trump called on the central bank to lower them.
Investors widely expect the Fed to hold interest rates steady, putting the central bank on a potential collision course with Trump. A longstanding norm of independence typically insulates the central bank from direct political interference.
A decision to maintain the current level of interest rates would pause a series of three consecutive interest rate cuts imposed by the Fed over the final months of 2024.
The Fed indicated last month that it would cut interest rates at a slower pace than it had previously forecast, however, pointing to a bout of resurgent inflation. That forecast sent stock prices plummeting, though markets have broadly recovered the losses.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain nearly a percentage point higher than the Fed’s target rate of 2%.
During a virtual address to the World Economic Forum in Davos, Switzerland, last week, Trump demanded a drop in interest rates after calling for a reduction of oil prices set by a group of nations known as OPEC, which includes Saudi Arabia.
The prospect of low oil prices will enable the Fed to dial back its fight against inflation and bring down interest rates, Trump said.
“I’m going to ask Saudi Arabia and OPEC to bring down the cost of oil,” Trump said, later adding: “With oil prices going down, I’ll demand that interest rates drop immediately.”
The U.S. does not belong to OPEC, nor does the president play a role in the organization’s decisions regarding the price of oil sold by its member states.
Several past presidents have sought to influence the Fed’s interest rate policy, including Trump, who repeatedly spoke out in favor of low interest rates during his first term.
On the campaign trail in August, Trump said a U.S. president should have a role in setting interest rates.
Fed Chair Jerome Powell struck a defiant tone in November when posed with the question of whether he would resign from his position if asked by Trump.
“No,” Powell told reporters assembled at a press conference in Washington, D.C., blocks away from the White House.
When asked whether Trump could fire or demote him, Powell stated: “Not permitted under the law.”
The Fed retreated in its fight against inflation over the final months of last year, lowering interest rates by a percentage point. Still, the Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%.
Last month, Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.
Powell also said a recent resurgence of inflation influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.
“It’s common-sense thinking that when the path is uncertain, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dark room full of furniture.”
(LOS ANGELES) — Multiple fires raging across the Los Angeles area will cost insurers as much as $30 billion, Wells Fargo and Goldman Sachs estimated in a report released this week.
After accounting for non-insured damages, the total costs will balloon to $40 billion, the report said.
The ongoing fires, according to analysts, “appear to already be the costliest wildfire event in California history.”
The forecast would make the fires one of the 20 costliest natural disasters in U.S. history, when calculated as a share of the nation’s gross domestic product, analysts added.
The wildfires have left a path of wreckage in their wake. More than 12,000 homes and other structures have burned down in the fire, the California Department of Forestry and Fire Protection said.
At least 24 people have died and more than a dozen others remain unaccounted for as multiple wildfires, fueled by severe drought conditions and strong winds, continue to burn.
Thousands of firefighters are battling wildfires across 45 square miles of Los Angeles County. About 92,000 people remain under mandatory evacuation orders and another 89,000 are under evacuation warnings.
A rise in high-cost natural disasters has strained insurers and helped send home insurance premiums nationwide soaring, experts previously told ABC News. Plus, a recent bout of acute inflation has made homebuilding and repairs more expensive, they noted, exacerbating the cost crunch for insurers.
Industry unrest roiling the insurance market in California demonstrates the role climate change has played in skyrocketing premiums and struggling insurers, some experts said.
The average home insurance price jumped a staggering 43% in California from January 2018 to December 2023, S&P Global found last year.
Over recent years, many insurers have reduced coverage or stopped offering it altogether in California as wildfire risks have grown. With more frequent and intense wildfires, insurers face the prospect of more claims and higher costs.
While wildfires are a natural and necessary part of Earth’s cycle, climate change and other more direct human influences have increased their likelihood. Climate change is making naturally occurring events more intense and more frequent, research shows.
Los Angeles residents and homes remain under threat from the wildfires.
A “particularly dangerous situation” with a red flag warning will go into effect in western Los Angeles County and most of Ventura County on Tuesday, weather officials said, with winds threatening to further fuel historic Southern California wildfires.
ABC News’ Kevin Shalvey, David Brennan, Emily Shapiro, Meredith Deliso, Max Golembo, Matthew Glasser and Julia Jacobo contributed to this report.
