US stocks suffered steep losses on Tuesday as President Donald Trump escalated his rhetoric over Greenland, threatening sweeping new tariffs on countries opposing the sale of the Danish territory to the United States.
The comments sparked a broad risk-off move across markets, driving equities lower, pushing Treasury yields higher and weighing on the US dollar.
The Dow Jones Industrial Average plunged 618 points, or about 1.2%. The S&P 500 fell 1.4%, while the Nasdaq Composite slid 2%, as selling pressure intensified across sectors.
US markets reopened after being closed Monday for the Martin Luther King Jr. Day holiday, amplifying the impact of headlines that had built up over the long weekend.
Tariff threats ignite market sell-off
The market reaction followed a series of statements from Trump over the weekend.
In a post on Truth Social on Saturday, the president said imports from eight NATO member countries would face escalating tariffs “until such time as a Deal is reached for the Complete and Total purchase of Greenland.”
According to Trump, the tariffs will begin at 10% on Feb. 1 and rise to 25% by June 1 if no agreement is reached.
He later threatened to impose 200% tariffs on French wines and champagne, amid reports that French President Emmanuel Macron was unwilling to join Trump’s proposed “Board of Peace.”
Trump also criticised the United Kingdom, calling the British government’s plan to transfer sovereignty of the Chagos Islands to Mauritius an “act of great stupidity.”
One of the islands hosts a joint UK-US military base. Trump said the move was “another in a very long line of National Security reasons why Greenland has to be acquired.”
Flight from US assets
Trump’s remarks triggered a flight from US assets. Treasury yields spiked as investors demanded higher compensation for holding US debt, while the dollar weakened, reflecting concerns over trade policy, geopolitical risk and the potential economic fallout from a widening tariff conflict.
The sell-off was broad-based, with few stocks trading higher in early sessions.
Technology shares, which tend to be more sensitive to higher yields and risk aversion, led the declines.
Nvidia, Advanced Micro Devices and Alphabet all fell more than 2%, weighing heavily on the Nasdaq.
The Cboe Volatility Index, often referred to as Wall Street’s “fear gauge,” jumped above 19, reaching its highest level since November.
The move signaled a sharp increase in demand for downside protection in equity markets.
Europe pushes back
European leaders reacted strongly to Trump’s latest tariff threats. Officials described the measures as “unacceptable” and, according to reports, are considering retaliatory steps.
France is said to be pushing for the European Union to deploy its most powerful economic countermeasure, the so-called Anti-Coercion Instrument, which allows the bloc to respond forcefully to economic pressure from third countries.
Trump, who is scheduled to speak at the World Economic Forum in Davos, Switzerland, on Wednesday, said he had agreed to hold discussions with European leaders at the conference to press his case for Greenland.
Earnings season adds another test
The market turmoil comes as investors enter a critical phase of the earnings season.
Quarterly results are expected this week from companies including Netflix, Charles Schwab, Johnson & Johnson and Intel.
Investors will be watching closely for guidance, as corporate outlooks are seen as crucial to sustaining bullish sentiment after a strong run in US equities.
Analysts currently expect the S&P 500 to deliver earnings growth of around 12% to 15%. With valuations already elevated, markets are increasingly sensitive to any sign that geopolitical shocks or trade disruptions could undermine profit growth.
Tuesday’s sharp sell-off underscored how quickly sentiment can shift when political risk intensifies.
As investors look ahead to earnings reports and Trump’s appearance in Davos, markets are likely to remain volatile, with trade policy and geopolitics firmly back at the centre of attention.
The post US stocks open deep in the red: Nasdaq slips around 2%, S&P down 1.4% appeared first on Invezz
