Nasdaq confirms correction, dollar weakens as tariff news fuels unease

NEW YORK :Stock indexes fell sharply and the dollar eased on Thursday, with the Nasdaq confirming it has been in a correction since peaking last December, as more announcements from U.S. President Donald Trump on tariffs fueled investor uncertainty.

The global bond market selloff continued, a day after the 10-year German Bund yield saw its biggest rise since the 1990s.

Trading was volatile as investors tried to stay on top of tariff headlines.

In the latest twist in his fast-changing trade policy, Trump on Thursday exempted goods from both Canada and Mexico under a North American trade pact for a month from the 25 per cent tariffs that he had imposed earlier this week.

The 25 per cent U.S. tariffs on imports from Mexico and Canada were imposed on Tuesday along with fresh duties on Chinese goods.

"Trump has been very confusing about these tariffs. One day they're on and the next day they're off for a month," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

"He did warn us that there was going to be some pain initially here, and the market doesn't like pain," he said.

With Thursday's 2.6 per cent decline, the Nasdaq was down a total of 10.4 per cent from its record high close on December 16, meeting a widely used definition of a correction.

The Cboe Volatility index rose to 24.87, its highest closing level since December 18.

Adding to the negative tone, an index of chipmakers dropped 4.5 per cent after a sales forecast from Marvell Technology failed to excite investors. Marvell shares fell 19.8 per cent on the day.

The Dow Jones Industrial Average fell 427.51 points, or 0.99 per cent, to 42,579.08, the S&P 500 fell 104.11 points, or 1.78 per cent, to 5,738.52 and the Nasdaq Composite fell 483.48 points, or 2.61 per cent, to 18,069.26.

MSCI's gauge of stocks across the globe fell 8.33 points, or 0.97 per cent, to 850.38. The pan-European STOXX 600 index slipped 0.03 per cent.

The U.S. dollar weakened while the safe-haven yen and Swiss franc advanced as jittery investors turned risk-averse and worries mounted over the potential impact of Trump's tariffs on the U.S. economy.

In afternoon trading, the dollar was down 0.9 per cent against the yen to 147.65 yen, hitting a five-month low earlier of 147.31. Against the Swiss franc, the dollar dropped to a three-month low of 0.8828 franc, and last traded down 0.9 per cent at 0.8827.

The single European currency was last down 0.05 per cent at $1.0785, after earlier hitting a four-month high of $1.0854. The euro was on track for its biggest weekly jump since May 2009.

The European Central Bank cut interest rates as expected and also said monetary policy was becoming less restrictive, which traders took to mean another cut in April might not be a given.

Ten-year German Bund yields were last up 10 basis points at 2.884 per cent, having jumped as high as 2.929 per cent on Wednesday.

German lawmakers are expected to debate a 500-billion-euro infrastructure fund and sweeping changes to state borrowing rules to fund defence from March 13.

The yield on benchmark U.S. 10-year notes rose 1.5 basis points to 4.282 per cent, from 4.267 per cent late on Wednesday.

Investors also assessed the latest batch of economic data for signs of cracks in the economy ahead of Friday's key monthly U.S. payrolls report.

Weekly initial U.S. jobless claims fell by 21,000 to a seasonally adjusted 221,000, according to the Labor Department, a bigger decline than expected by economists polled by Reuters, who had forecast 235,000 claims.

By contrast, global outplacement firm Challenger, Gray & Christmas earlier in the day said that planned job cuts vaulted 245 per cent to 172,017 last month, the highest level since July 2020 when the economy was in the midst of the COVID-19 pandemic.

Also in focus were comments by European leaders, who said they would stand by Ukraine and spend more on defense in a world upended by Trump's reversal of U.S. policies. Trump's suspension of military aid to Kyiv this week fanned fears the region can no longer rely on U.S. protection in place since World War Two.

Oil prices were largely unchanged, with Brent futures rising 16 cents, or 0.2 per cent, to settle at $69.46 a barrel. U.S. West Texas Intermediate crude futures gained 5 cents, or 0.1 per cent, to settle at $66.36.

Spot gold fell 0.1 per cent to $2,915.83 an ounce.