The main Wall Street indices slumped in early trade on Tuesday, as the growing frictions between the United States and its European allies over Greenland has affected the market's sentiments.
The wider index, S&P 500, slumped 102.26 points or about 1.4% to 6,845.96 minutes after the opening bell. The tech-heavy Nasdaq Composite was down 374.16 points or 1.6% at 23,123.34, whereas the Dow Jones Industrial Average fell 766.8 points or 1.55% to 48,592.45.
The negative start came in the backdrop of Trump threatening 10% tariffs on Denmark, Norway, Sweden, the UK, France, Germany and the Netherlands from Feb. 1, if they do not support his bid to take control of Greenland. The tariffs would rise to 25% from June 1, he warned in a social media post on Saturday. The market reaction was felt only on Tuesday, as Wall Street was closed for trading on Monday due to the Martin Luther King Jr. Day holiday.
Trump's Greenland push has so far been met with resistance by Denmark, which controls the autonomous island-territory of Greenland. Most of the Western European nations, which are seen as all-weather allies of the US, have opposed Trump's forceful acquisition plans.
The move could lead to frictions within the NATO, while also sparking a global trade war, analysts warn. Trump's imposition of tariffs on EU countries may result in reciprocal levies. A section of the union has already marked its angst over the trade deal inked with the US last year, which is seen by critics to be lopsided in favour of America.
Several EU leaders have called Trump's tariff warning "unacceptable", with French President Emmanuel Macron reportedly pushing the European bloc to use the "Anti-Coercion Instrument" — its strongest economic counter-threat — against the US if it ends up slapping the tariffs from Feb. 1.
Also Read: Trump Threatens 200% Tariffs On France After Peace Board Snub, Shares Screenshot Of Chat With Macron
AI hot-bet Nvidia was among the losers in early trade, with its stock sliding 3.3% to $180.02. Micron Technology, also a semiconductor player, slipped 1.66% to $368.77. In the Mag7 pack, Apple was down 1.75% at $251.05, Alphabet slipped 1.7% to $324.77, Microsoft declined 1.63% at $452.37, and Tesla slid 2.98% to $424.4, at 10:20 a.m. EST.
As the market sentiment weakened, a flight from US assets was witnessed, with the dollar declining and treasury yields spiking. The yields on 10-year Treasury surged to a high of 4.299%, the highest since Sept. 3.
The global headwinds spelled gains for gold, as the safe-haven asset jumped 1% to $4,724.65 an ounce. In the crude basket, Brent futures were up 1.69% at $65.02 a barrel, whereas the West Texas Intermediate futures were trading 1.9% higher at $60.46 at 10:36 p.m. EST.
Bitcoin, the world's largest-traded cryptocurrency, was down 2.08% at $90,666.41.
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