Wall Street posts biggest daily drop in three months, Trump Greenland tariff threat triggers wide selloff

• Both the S&P 500 and Nasdaq fell below their 50-day moving averages, while the CBOE Volatility Index spiked to 20.09, its highest close since November 24
• Trump threatened 10% tariffs on eight European nations starting February 1, escalating to 25% by June 1 unless the U.S. can purchase Greenland, which Denmark insists is not for sale
• Market stress was compounded by turmoil in Japanese government bonds, which plunged to record-low prices following Prime Minister Takaichi's snap election call, creating spillover effects in European and U.S. debt markets

Wall Street Suffers Largest Drop in Three Months on Trump Tariff Threats

Market Performance:

Wall Street recorded its worst single-day decline since October 10, with all three major indexes sliding sharply on Tuesday, January 20. The S&P 500 fell 2.06% to 6,796.86, the Nasdaq dropped 2.39% to 22,954.32, and the Dow Jones declined 1.76% to 48,488.59. Both the S&P 500 and Nasdaq slipped below their 50-day moving averages.

Primary Catalyst:

The selloff was triggered by President Trump's weekend announcement threatening additional 10% tariffs on European nations (Denmark, Norway, Sweden, France, Germany, Netherlands, Finland, and Great Britain) starting February 1, escalating to 25% by June 1 unless the U.S. acquires Greenland. Greenland and Denmark have firmly stated the territory is not for sale.

Market Indicators:

The CBOE Volatility Index spiked to 20.09, its highest close since November 24. Trading volumes surged to approximately 20.6 billion shares. Gold reached fresh record highs amid risk-off sentiment, while Bitcoin fell over 3%.

Additional Concerns:

Japanese government bonds plunged, sending yields to record highs after Prime Minister Takaichi called for a snap election, creating spillover effects in European and U.S. bond markets. Treasury selloffs were particularly pronounced on the long end of the curve.

Outlook:

Analysts remain divided on whether this represents a temporary knee-jerk reaction or sustained correction. Investors await key economic data this week, including Q3 GDP updates, January PMI readings, and the PCE inflation report. Earnings season continues with major companies like Netflix reporting results.