Nasdaq Falls as Trump Threatens Tariffs on European Alcohol, Intel Soars

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•  13 Mar 2025
 

Wall Street is seeing red today as the Nasdaq plunges 1.6% and the S&P 500 drops 1.2%, reversing yesterday's gains fueled by better-than-expected February inflation data. Investors remain on edge as Trump's tariff threats on European alcohol imports heighten global trade tensions.

President Donald Trump has escalated his trade rhetoric, threatening to impose a 200% tariff on European alcohol, including champagne and wine, if the European Union does not remove its 50% tariff on American whiskey imports. This latest salvo in the ongoing trade dispute is unsettling investors and dragging down major U.S. stock indices.

Despite the broader market decline, Intel ($INTC) is soaring 15.5%, driven by investor optimism surrounding the company's newly appointed CEO. The leadership change is fueling hopes for a strategic turnaround and renewed growth for the semiconductor giant.

In contrast, Tesla ($TSLA) is down 3%, reflecting broader market concerns and ongoing volatility. Analysts point to heightened uncertainty around interest rates and inflation, which continue to weigh on high-growth tech stocks.

While recent consumer and producer price indexes show a slight slowdown in inflation—3.4% in February versus 3.6% in January—some analysts warn that the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) Index, may still reflect rising pressures. According to Bank of America, the PCE index could show a 2.7% annual increase in February, up from 2.6% in January.

As a result, expectations for a Fed rate cut in upcoming meetings are fading fast. The likelihood of a May rate cut has plummeted from 52% to just 30%, further dampening investor sentiment.

In search of stability, some institutional investors are shifting funds to European markets, perceived as more stable amid U.S. volatility. However, Yakira Shachar, Head of Global Markets Research at Bank Hapoalim, warns this may be a mistake. While Europe may offer short-term refuge, she emphasizes that the U.S. still holds significant growth drivers in the long run.

Adding to geopolitical uncertainty, Russian President Vladimir Putin announced that Russia "principally agrees" to a U.S.-proposed ceasefire with Ukraine, though he insists on "minor adjustments." The proposal, which Ukraine has already accepted, includes a 30-day cessation of hostilities and outlines conditions for permanent peace talks. Key issues under negotiation include the return of Ukrainian territories occupied by Russia and the future of Ukraine's mineral resources desired by the U.S.

As markets grapple with trade wars, geopolitical tension, and interest rate uncertainty, volatility looks set to continue. Stay tuned for further updates as the situation evolves.