Wall Street fell broadly on Tuesday after President Donald Trump threatened to impose new tariffs on eight European countries amid tensions tied to his push to assert American control over Greenland.
U.S. indexes extended losses from a volatile start to the year. The S&P 500 fell 143.15 points, or 2.1%, to 6,796.86, the steepest drop for the benchmark since October. The Dow Jones Industrial Average fell 870.74 points, or 1.8%, to 48,488.59, while the Nasdaq composite dropped 561.07 points, or 2.4%, to 22,954.32.
Nearly every sector fell, with technology stocks posting some of the largest moves. Nvidia fell 4.4% and Apple slid 3.5%, while retailers, banks and industrial companies also declined, including Lowe’s down 3.3%, JPMorgan Chase down 3.1% and Caterpillar down 2.5%.
Trading losses were not confined to the United States. European markets and markets in Asia also fell. In Japan, long-term bond yields rose to record levels on concerns about the government’s fiscal policy, adding to anxiety across global markets, the AP reported.
The tariff threat has been a recurring driver of market swings in Trump’s second term, the AP said, with stocks selling off on tariff promises and then rallying when he delays, cancels or negotiates a lower rate. Trump said Saturday that he would charge a 10% import tax starting in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland.
Trump linked his stance on Greenland to last year’s decision not to award him the Nobel Peace Prize. In a text message released Monday to Norway’s prime minister, Jonas Gahr Støre, Trump said he no longer felt “an obligation to think purely of Peace,” language released alongside the broader Greenland dispute. The message appeared to ratchet up a standoff between Washington and its closest allies over his threats to take over Greenland, a self-governing territory of NATO member Denmark.
European leaders have responded with outrage and diplomatic activity, considering possible countermeasures including retaliatory tariffs and, in a first-ever move, the European Union’s anti-coercion instrument, according to the AP. The trade and political conflict with Europe is unfolding as world leaders gather for the World Economic Forum in Davos, Switzerland this week.
Wedbush Securities analyst Dan Ives said in a note that the new tariff threat “is clearly an overhang on the conference,” but that it would likely simmer over time. Ives wrote that, in his view, the “bark” would be worse than the “bite” as negotiations take place and tensions ultimately calm between Trump and European Union leaders.
Markets also reflected investor focus on inflation and safe-haven assets. Gold surged 3.7% and silver rose 6.9%, moves often treated as signals of risk aversion during geopolitical turmoil. The AP also reported that the trade tensions “short-circuited” a recent rally in bitcoin, which rose above $96,000 late last week before dropping back to around $89,700.
In the bond market, the yield on the 10-year Treasury rose to 4.29% from 4.23% late Friday, while the two-year yield held steady at 3.60%. Companies tied to consumer staples held up better than many others, including Colgate-Palmolive, up 1.1%, and Campbell’s, up 1.5%.
Oil prices rose as well, with U.S. crude up 1.5% to $60.34 per barrel and Brent crude up 1.5% to $64.92. Tariffs could boost inflation, and reigniting inflation that is already above the Federal Reserve’s 2% target could complicate the central bank’s job, the AP said.
The Fed cut its benchmark interest rate three times late in 2025 to support the economy as the job market weakened, and it has taken a cautious view because inflation risks remain, the report said. Wall Street will get another update on Thursday, when the government releases the personal consumption expenditures price index, the Fed’s preferred inflation measure, and it is also looking ahead to next week’s policy meeting, where investors are betting the benchmark rate will be held steady.