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REFILE - Stocks fall with S&P500 in correction; bonds are in demand amid tariff anxiety (March 13).

REFILE - Stocks fall with S&P500 in correction; bonds are in demand amid tariff anxiety (March 13).

Investors fled to safer assets on Thursday, as global trade tensions were feared to increase inflation and slow the growth of the economy after U.S. president Donald Trump's recent tariff threats.

The benchmark S&P 500 closed Thursday for the first time more than 10% lower than its previous record close, which was achieved on February 19,

Trump has threatened to impose a 200% tariff on European beverages if the EU doesn't remove the whiskey surcharges from the United States. Trump's increased tariffs on U.S. imports of steel and aluminum took effect Wednesday.

The Bureau of Labor Statistics, part of the Labor Department, released data on Thursday that showed U.S. Producer prices (PPI), which were expected to rise faster than consumer prices (CPI), actually remained unchanged in February.

Last month's trends were not enough to reassure investors, who had been preparing for the potential impact of trade conflicts on future inflation and economic growth.

Tim Ghriskey is a senior portfolio strategist with Ingalls & Snyder, New York. He said that if it weren't for the ongoing trade war, the market would have been up strongly on the inflation data. "Traders have their attention on the trade conflict."

Ghriskey said, "It appears that the administration (in the U.S.) is very aggressive. They seem to be committed to the long-term and personalities are unlikely to change their minds in the near future."

Wall Street saw the S&P500 fall 77.78 or 1.39% to 5,521.52.

The Dow Jones Industrial Average also appeared to be approaching a confirmation of a correction, as it ended Thursday at 40,813.57, down 537.36, or 1.30%. This was roughly 9.4% lower than its latest record-breaking closing high.

The Nasdaq Composite dropped 345.44, or 1.96% to 17,303.01. After confirming the correction on March 6, the tech-heavy index fell more than 14% compared to its recent record.

According to Yardeni Research, stock market corrections have been fairly common. The S&P 500 has experienced a correction at least 56 times since 1929. Data showed that only 22 of these corrections morphed to bear markets. A bear market is defined as a decline of at least 20% from the most recent highs.

MSCI's index of global stocks fell 9.33 points or 1.12% to 821.52 in Thursday. This is more than 7% lower than its latest record high, after hitting his lowest point since September.

The pan-European STOXX 600 Index closed earlier down 0.15%, after gaining 0.81% the previous session.

The U.S. S&P 500 is down over 6% year to date, but European stocks are doing better thanks to government plans for defense spending and a possible Ukraine peace agreement. The STOXX Index is up 6.5% for the year-to-date despite recent drops.

U.S. Treasury Yields fell on Friday as the equity selloff increased demand for U.S. Government debt. The escalating Trade Wars between the United States, and its trading partners threatens to deter growth and increase inflation.

The yield on the benchmark 10-year U.S. notes dropped 4.6 basis point to 4.27% from 4.316% at late Wednesday, while the 30-year bond rate fell 4.1 basis to 4.59%.

The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve fell by 4 basis points, to 3.955% from 3.995% at late Wednesday.

The U.S. Dollar was mixed in terms of currencies. It weakened against the safe-haven Japanese yen, but gained on the Euro and Canadian dollar.

The dollar fell 0.38% against the Japanese yen to 147.68.

The euro fell 0.33% to $1.085, while the Canadian dollar declined 0.45% against the greenback. Against the Swiss Franc the dollar gained 0.14%.

Oil prices fell after a rally on Wednesday, when traders took into account macroeconomic concerns as well as demand and supply expectations.

U.S. crude oil settled at $66.55 per barrel down $1.13 or 1.67% and Brent settled at $69,88 per barrel down 1.51% or $0.07 for the day.

Gold prices soared to record levels on Thursday and were just a few cents away from the $3,000 mark per ounce. The momentum was driven by increased tariff uncertainty as well as bets placed on the Federal Reserve's monetary policy being eased.

Spot gold increased by 1.73%, to $2982.84 per ounce. U.S. Gold Futures increased by 1.51% to $2.983.50 per ounce.

(source: Reuters)