March 11 (Reuters) - The benchmark S&P 500 was briefly on track to confirm a correction on Tuesday after U.S. President Donald Trump announced fresh tariffs on Canada, adding to investor unease that his trade policies could trigger an economic slowdown.
The S&P 500 index (.SPX), dropped as low as 5,528.41 points, falling more than 10% during the session from its record closing high of 6,144.15 on February 19.
If the index closes 10% or more below this level, it would confirm a correction based on a widely used definition.
On Monday, the S&P 500 recorded its most significant one-day drop since December 18, wiping out a staggering $4 trillion from its recent peak. Meanwhile, the tech-heavy Nasdaq confirmed a 10% correction late last week.
Trump doubled his planned tariffs on all imports of steel and aluminum products from Canada to 50%, in response to the province of Ontario's decision to place a 25% tariff on its electricity exports to the United States.
He also threatened to "substantially increase" tariffs on cars coming into the U.S. on April 2. Ford (F.N), and General Motors (GM.N), , that have vast supply chains across North America, fell 2% and 4.1%, respectively.
Global markets have been roiled ever since Trump sparked back-and-forth tariff moves against major trading partners such as Canada, Mexico and China. Analysts have warned that the escalating trade tension could fan inflationary pressures and potentially stall economic growth.
"Every time we feel like we're getting a little bit of a lift, we get a Trump update on more tariffs," said Dennis Dick, a trader at Triple D Trading.
"International investors looking at all the political uncertainty in the North American markets are saying let's invest elsewhere."
At 01:41 p.m. the Dow Jones Industrial Average (.DJI), fell 675.17 points, or 1.61%, to 41,236.54, the S&P 500 (.SPX), lost 74.77 points, or 1.34%, to 5,539.60 and the Nasdaq Composite (.IXIC), lost 178.73 points, or 1.02%, to 17,289.59.
Nine of the 11 S&P 500 subsectors fell, led by a 0.8% drop in industrials (.SPLRCI), . The S&P 500 equally weighted index (.SPXEW), lost 1%.
Tariff uncertainty has also weighed on consumer sentiment, with company executives increasingly flagging the impact it can have on upcoming earnings.
Kohl's (KSS.N), forecast a bigger-than-expected drop in annual comparable sales, sending the retailer's shares down 26.3%.
Dick's Sporting Goods (DKS.N), declined 6.6% after the retailer forecast downbeat annual results.
Delta Air Lines (DAL.N), slid 8.1% after the carrier slashed its first-quarter profit estimates by half.
American Airlines (AAL.O), also dropped 6.8% after the carrier forecast a bigger-than-expected first-quarter loss, sending the broader Dow transportation index (.DJT), down 2.8%.
"(Tariff uncertainty) is creating a degree of paralysis across the system," said David Russell, global head of market strategy at TradeStation.
Meanwhile, a U.S. Labor Department report showed job openings increased in January. A closely watched inflation report is expected later in the week.
Interest rate futures point to the U.S. Federal Reserve leaving borrowing costs unchanged at its meeting next week, but traders are increasingly pricing in more interest rate cuts in the second half of the year on expectations of slowing growth.
Megacaps such as Nvidia (NVDA.O), rose 2% and Amazon.com (AMZN.O), added 0.5%, while Tesla (TSLA.O), added nearly 2.6% after the stock fell 15.4% in the previous session.
Oracle (ORCL.N), dropped 4.5% after the cloud company missed quarterly revenue estimates.
Citi became the latest brokerage to revise its stance on U.S. stocks, downgrading its recommendation to "neutral".
Declining issues outnumbered advancers for a 2.3-to-1 ratio on the NYSE and a 1.87-to-1 ratio on the Nasdaq.
The S&P 500 posted four new 52-week highs and 17 new lows, while the Nasdaq Composite recorded 16 new highs and 316 new lows.
Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Shounak Dasgupta
