NEW YORK — Not even a double-shot of good news on the U.S. economy seemed to be enough to stop Wall Street’s bleeding. Stocks fell Thursday after President Donald Trump upped the stakes in his trade war by threatening huge taxes on European wines and alcohol.

The S&P 500 closed down 1.4% to finish more than 10% below its record, which was set just last month. Professional investors call such a decline a “correction,” and it’s the first for the index since 2023. The Dow fell 1.3%, and the Nasdaq lost 2%. Even encouraging reports showing better-than-expected readings on inflation and joblessness couldn’t offset worries about escalating tariffs around the world.

The swings for stocks have been coming not just day to day but also hour to hour, and the Dow hurled between a slight gain and a drop of more than 445 points during Thursday morning’s trading.

The turbulence is because of uncertainty about how much pain Trump will let the economy endure through tariffs and other policies in order to reshape the country and world as he wants. He has said he wants manufacturing jobs back in the U.S., along with a smaller U.S. government workforce and other fundamental changes.

Trump’s latest escalation came Thursday when he threatened 200% tariffs on Champagne and other European wines, unless the European Union rolls back a “nasty” tariff it announced on U.S. whiskey. The European Union announced that move on Wednesday, in response to U.S. tariffs on European steel and aluminum that kicked in earlier in the day.

U.S. households and businesses have already reported drops in confidence because of all the uncertainty about which tariffs will stick from Trump’s barrage of on-again, off-again announcements.

A particularly feared scenario for the overall economy is one where its growth stagnates but inflation stays high because of tariffs. Few tools are available in Washington to fix what’s called “stagflation.”

Good news came on both those economic fronts Thursday.

One report showed inflation at the wholesale level last month was milder than economists expected. It followed a similarly encouraging report from the prior day on inflation that U.S. consumers are feeling.

But “the question for markets is whether good news on the inflation front can make itself heard above the noise of the ever-changing tariff story,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

A separate report said fewer U.S. workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market remains relatively solid. If that can continue, it could allow U.S. consumers to keep spending, and that’s the main engine of the economy.

In the bond market, Treasury yields lost an early gain to sink lower.

The yield on the 10-year Treasury fell to 4.26% from 4.32%. The yield has been mostly dropping since January, when it was approaching 4.80%, as traders and economists have ratcheted back their expectations for U.S. economic growth.