By Caroline Valetkevitch
NEW YORK (Reuters) -Stock indexes fell sharply in volatile trading Thursday as investors took in the latest announcements from U.S. President Donald Trump on tariffs, while the U.S. dollar eased as investors turned risk-averse.
The global bond market selloff continued, a day after the 10-year German Bund yield saw its biggest rise since the 1990s.
Trading was choppy was investors assessed the latest comments from Trump on tariffs.
Trump on Thursday exempted goods from both Canada and Mexico under a North American trade pact for a month from the 25% tariffs that he had imposed earlier this week, the latest twist in fast-shifting trade policy that has whipsawed financial markets and business leaders.
He had imposed 25% U.S. tariffs on imports from Mexico and Canada on Tuesday along with fresh duties on Chinese goods, adding to worries about the impact on inflation and growth.
“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.
Adding to the negative tone, an index of chipmakers fell after a sales forecast from Marvell failed to excite investors.
The Dow Jones Industrial Average fell 467.34 points, or 1.09%, to 42,538.76, the S&P 500 fell 106.64 points, or 1.83%, to 5,735.99 and the Nasdaq Composite fell 486.84 points, or 2.62%, to 18,065.89.
MSCI’s gauge of stocks across the globe fell 8.70 points, or 1.01%, to 850.01. The pan-European STOXX 600 index fell 0.03%.
Against the Japanese yen, the dollar weakened 0.77% to 147.74.
The single European currency was up 0.07% at $1.0797, after earlier hitting a four-month high of $1.0854. The euro was 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%, having jumped as high as 2.929% 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.
Japan’s 10-year government bond yield, had hit a near 16-year high, while the yield on benchmark U.S. 10-year notes rose 1.7 basis points to 4.284%, from 4.267% late on Wednesday.
Investors also assessed the latest batch of economic data for signs of cracks in the economy ahead of Friday’s 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, below expectations of economists polled by Reuters of 235,000.
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.
(Reporting by Caroline Valetkevitch; Additional reporting by Marc Jones and Amanda Cooper; editing by Chizu Nomiyama, Mark Heinrich, David Evans and Cynthia Osterman)
