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Wall Street Sinks as Trump Threatens 01/20 15:29
Stocks sank on Wall Street after President Donald Trump threatened to hit
eight European countries with new tariffs as tensions escalate over his
attempts to assert American control over Greenland.
NEW YORK (AP) -- Stocks sank on Wall Street after President Donald Trump
threatened to hit eight European countries with new tariffs as tensions
escalate over his attempts to assert American control over Greenland.
The S&P 500 fell 2.1% Tuesday, its biggest drop since October. Technology
stocks were the biggest weights. The Dow Jones Industrial Average dropped 1.8%.
The Nasdaq composite slumped 2.4%.
Trump said Saturday that he would charge a 10% import tax starting in
February on goods from the eight European nations. European markets also fell,
while gold prices surged. Long-term Treasury yields rose in the bond market.
THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.
NEW YORK (AP) -- Stocks slumped in afternoon trading on Wall Street Tuesday
after President Donald Trump threatened to hit eight NATO members with new
tariffs as tensions escalate over his attempts to assert American control over
Greenland.
The S&P 500 fell 2%, pulling back further from the record it set early last
week. It was the first time U.S. markets could react to the escalation from
Trump, as they were closed on Monday for Martin Luther King Jr. Day.
The Dow Jones Industrial Average fell 877 points, or 1.8%, as of 2:46 p.m.
Eastern. The Nasdaq composite slumped 2.3%.
The losses were widespread and led by technology stocks, many of which
already have more influence over the direction of the market because of
outsized values. Retailers, banks and industrial companies also fell sharply.
Nvidia, one of the most valuable companies in the world, plunged 3.6%.
Amazon fell 3.7%, JPMorgan Chase fell 2.9%, and Caterpillar lost 3%.
Companies that focus on consumer staples held up better than most of the
market. Colgate-Palmolive rose 1.5% and Campbell's rose 1.7%.
The price of U.S. crude oil rose 1.5% to $60.34 per barrel. The price of
Brent crude, the international standard, rose 1.3% to $64.76.
European markets and markets in Asia fell.
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. The annual combined imports from European
Union nations are greater than those from the top two biggest individual
importers into the U.S., Mexico and China.
Gold prices surged 3.7% and silver prices soared 6.9%. Both reached for
records. Such assets are often considered safe havens in times of geopolitical
turmoil.
The trade tensions apparently short-circuited a recent rally in bitcoin. The
cryptocurrency rose above $96,000 late last week but has dropped back to around
$89,300.
Treasury yields were mixed in the bond market. The yield on the 10-year
Treasury rose to 4.29% from 4.23% late Friday. The yield on the two-year
Treasury slipped to 3.59% from 3.60% late Friday.
Trump linked his aggressive stance on Greenland to last year's decision not
to award him the Nobel Peace Prize, telling Norway's prime minister that he no
longer felt "an obligation to think purely of Peace," in a text message
released Monday.
Trump's message to Jonas Gahr Store 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.
Trump's threats have sparked outrage and a flurry of diplomatic activity
across Europe, as leaders consider possible countermeasures, including
retaliatory tariffs and the first-ever use of the European Union's
anti-coercion instrument.
The trade and political conflict with Europe is heating up just as world
leaders meet at the World Economic Forum annual meeting in Davos, Switzerland
this week. Wedbush Securities analyst Dan Ives said the new tariff threat "is
clearly an overhang on the conference," but that it would likely simmer over
time.
"Our view is just like over the last year the bark will be worse than the
bite on this issue and tariff threats as negotiations take place and tensions
ultimately calm down between Trump and EU leaders," Ives wrote in a note to
clients.
Tariffs have been looming over the U.S. and global economies since 2024.
Trump's tariff policy has been confusing and uncertain, involving the threat or
implementation of tariffs and then often followed by delays or cancellations.
Existing tariffs have added more pressure to already high prices on goods and
the threat of more to come makes it difficult for businesses to plan ahead.
The threat of tariffs reigniting already high inflation could further
complicate the Federal Reserve's job. The central bank cut its benchmark
interest rate three times late in 2025 to help bolster the economy as the job
market weakened. But, it has taken a more cautious view because of the risk of
rising inflation, which remains above the Fed's target of 2%.
Lower interest rates on loans can help bolster economic activity, but they
could also fuel inflation, which could counter any benefit from lower interest
rates.
The Fed, and Wall Street, will get another update on inflation on Thursday,
when the government releases the personal consumption expenditures price index,
or PCE. It is the Fed's preferred measure for inflation.
The Fed will meet next week for its policy meeting on interest rates and
Wall Street is betting that the central bank will hold its benchmark interest
rate steady.
Wall Street is also in the midst of the latest round of corporate earnings,
which could help provide more insight into how companies are handling
uncertainty from tariffs, geopolitics and cautious consumers.
Industrial and consumer conglomerate 3M slumped 6.9% after reporting mixed
results for its most recent quarter. United Airlines and Netflix will report
their results after the market closes on Tuesday. Companies from a wide range
of industries will report their results this week, including Johnson & Johnson,
Halliburton and Intel.
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