Greenland Spat Sparks Biggest Drop Since October

(Tuesday market close) Stocks plunged in a broad-based, global sell-off on Tuesday after President Trump threatened additional tariffs on European allies if they oppose the sale of Greenland to the United States over the weekend.

The Dow Jones Industrial Average^® ($DJI) lost 870.74 points (-1.76%) to 48,488.59, the S&P 500^® dropped 143.15 points (-2.06%) to 6,796.86, and the Nasdaq Composite^® ($COMP) fell 561.07 points (-2.39%) to 22,954.32.

Treasurys also sold off, the dollar declined, and the yield curve steepened amid the brewing geopolitical and trade tensions. Meanwhile, the CBOE Volatility Index^®, or VIX, spiked 10.3% to 20.78 after largely remaining range bound in recent months.

"Risk appetite is waning, and the 'sell America trade' is picking up momentum," said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research. "The sell-off isn't confined to U.S. markets—European/Asian markets are also weak as traders fret over possible trade retaliation and broader geopolitical headwinds tied to diplomatic tensions."

Investors looked to gold, which has surged over the past year, as a safe haven during Tuesday's turbulent trading. The precious metal rose more than 3.6% on the day, touching a record high above $4,760. Cryptocurrencies, on the other hand, fell sharply, with bitcoin (/BTC) dropping roughly 3.3% and ether (/ETH) falling nearly 7% as of late Tuesday afternoon.

The risk-off move in markets was exacerbated after several European Union countries threatened to suspend previously agreed upon trade deals in response to President Trump's tariff rhetoric. The Danish pension operator AkademikerPension also revealed plans to exit its roughly $100 million Treasury position by the end of the month, underscoring concerns about demand for U.S. debt amid rising trade tensions.

While markets were rattled by the Greenland-related spat on Tuesday, the longer-term impact of the latest geopolitical and trade drama is still up in the air.

"We need more details. We have seen many tariff threats recently, with not all of them being carried out," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, or SCFR. "That's not to say that the Greenland developments don't matter. If the proposed tariff increases on our EU partners do kick in, that would be a fairly dramatic escalation in the trade dispute with the EU. We just find ourselves in a position of having limited information at this point; and so does the market, which makes the reaction difficult to extrapolate."

From here, investors will be closely watching a looming U.S. Supreme Court decision on whether the executive branch can legally impose sweeping tariffs under the International Emergency Economic Powers Act. "That has the potential to add another kink in the process of assessing what the state of trade policy will look like moving forward," Gordon said.

Looking ahead, earnings from the pharma giant Johnson & Johnson (JNJ) will be in-focus tomorrow, followed by GE Aerospace (GE), Procter & Gamble (PG), Abbott Laboratories (ABT), and Intel (INTC) on Thursday. From an economic data perspective, the final third quarter gross domestic product report and the Personal Consumption Expenditures (PCE) price index are both due Thursday. The Fed's favored inflation gauge will likely be the highlight, with investors hoping to see progress in taming inflation, which could increase the odds of more rate cuts this year.

Of course, earnings and economic data could be overshadowed by ongoing trade developments between the EU and the U.S. as the week goes on. President Trump doubled down on his recent threats against EU member nations on Tuesday ahead of an appearance at the World Economic Forum's flagship event in Davos, Switzerland. In a series of Truth Social posts, Trump insisted there is "no going back" on his move to seize Greenland, saying it was an issue of "national and world security." Whether the escalating tensions between the EU and the U.S will continue, however, is still up for debate.

"We don't yet know is whether we'll see an early-April situation, during which market turmoil in aftermath of 'Liberation Day' triggered an announced delay in tariffs' implementation," said Sonders.

• Netflix (NFLX) saw its stock drop more than 4% in after-hours trading despite beating consensus earnings and revenue forecasts for the fourth quarter. The stock was dragged down after the streaming giant revealed it will likely miss first quarter estimates.
   
• 3M (MMM) stock slid 7% despite topping consensus earnings and revenue forecasts on Tuesday. The diversified industrial company was at least partially a victim of the broader market sell-off. However, it also reported weak demand in its consumer segment and its 2026 adjusted earnings-per-share guidance came in slightly below Wall Street's forecasts.
   
• Shopify (SHOP) was caught in the broad tech rout on Tuesday, with shares plunging 7.3% as investors shifted away from growth stocks and toward safe-haven assets.
   
• The entirety of the Magnificent Seven—Alphabet (GOOGL), Amazon (AMZN), Microsoft(MSFT), Tesla (TSLA), Nvidia (NVDA), Meta Platforms (META), and Apple (AAPL)—were pulled down by the risk-off move.
   
• Sandisk (SNDK) stock soared 9.6% despite the tech rout on Tuesday, as investors continued to pile into the computer hardware company which has benefitted from AI and data center demand for its products.
   
• Intel (INTC) shares also bucked the trend, rising 3.4% ahead of its earnings report after getting favorable coverage from multiple Wall Street analysts.
   
• The software firm turned bitcoin Treasury company Strategy (MSTR) saw its stock nosedive 7.8%, following the broad decline in cryptocurrencies.
   
• Bitcoin was caught in the broad sell-off Tuesday, falling more than 3.3% to around $90,000 by late Tuesday afternoon, with investors opting for gold as a safe haven instead of the leading cryptocurrency.
   
• Futures markets priced in a just a 5% chance of a 25-basis point rate at the Fed's January meeting as of market close on Tuesday, according to the CME FedWatch Tool. The odds of a March rate cut rose slightly to 21%.

Tumultuous market conditions can make anyone worried about their portfolio. Schwab offers several articles that provide insights to help investors manage their holdings at such times:

Bear Market: Now What?
Market Volatility in Retirement: Are You Prepared? 
Navigating the Markets: Tariffs and Trade
How 3 Types of Investors Can React to Volatility 

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

January 21: September and October construction spending, December pending home sales, and expected earnings from Johnson & Johnson (JNJ), Truist (TFC), and Halliburton (HAL).

January 22: Q3 GDP final estimate and expected earnings from GE Aerospace (GE), Procter & Gamble (PG), Abbott Laboratories (ABT), Freeport-McMoRan (FCX), Intel (INTC), Intuitive Surgical (ISRG), Capital One Financial (COF), and CSX (CSX).

January 23: Expected earnings from Booz Allen Hamilton (BAH) and Ericsson (ERIC). University of Michigan consumer sentiment survey final results for January.

January 26: Expected earnings from Baker Hughes (BKR), Steel Dynamics (STLD), and WR Berkley (WRB)

January 27: Consumer confidence, new home sales and expected earnings from UnitedHealth Group (UNH), Boeing (BA), American Airlines (AAL), General Motors (GM), United Parcel Service (UPS), Northrup Grumman (NOC), Kimberly-Clark (KMB), HCA Healthcare (HCA), and RTX Corp (RTX), Seagate Technology (STX), Texas Instruments (TXN).