U.S. stock futures tumbled on Tuesday as investors reacted to President Donald Trump’s renewed tariff threats against European nations amid his push to acquire Greenland.
Dow Jones Industrial Average futures dropped 616 points, or 1.2%, while S&P 500 futures fell 1.4% and Nasdaq futures slid 1.7%. The projected decline for the S&P 500 would mark its largest drop in two months.
The sell-off followed a holiday closure on Monday for Martin Luther King Jr. Day, with markets absorbing Trump’s weekend announcement on Truth Social. He vowed to impose 10% tariffs starting February 1 on imports from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Great Britain, escalating to 25% on June 1, until a deal is reached for the “Complete and Total purchase of Greenland.”
Leaders in Greenland and Denmark have repeatedly stated the territory is not for sale. Trump also threatened 200% tariffs on French wines and champagne, citing reports that President Emmanuel Macron is reluctant to join his proposed ‘Board of Peace.’ He further criticized the British government’s decision to transfer sovereignty of the Chagos Islands to Mauritius, calling it an “act of great stupidity” and linking it to national security reasons for pursuing Greenland.
Treasury yields rose sharply, and the U.S. dollar weakened as investors shifted away from American assets. Gold prices hit record highs above $4,700 per ounce, boosting U.S.-listed shares of miners like Hecla Mining, up 7.2%, and Endeavour Silver, up 4.3%. The Cboe Volatility Index, known as Wall Street’s fear gauge, climbed above 19 to a two-month high of 19.69.
“With the US off yesterday, the implications of the tariff threats over Greenland had yet to fully percolate through financial markets,” Jim Reid of Deutsche Bank wrote in a note, per CNBC. “Markets have reacted, but there’s clearly room for bigger moves if the rhetoric increases further.”
Reid noted “growing fears about some kind of retaliatory trade escalation from Europe, with increasingly strong comments from several officials.”
European leaders have deemed the threats “unacceptable” and are weighing responses, including France’s push for the EU’s Anti-Coercion Instrument.
“We’re getting the weakness because the headlines are going to drive angst and concern about what the future holds,” said David Lundgren, chief market strategist at Little Harbor Advisors, Reuters reported.
Technology stocks led early declines, with Nvidia, AMD, and Alphabet each down more than 2%. Industrial firm 3M fell 4.8% after issuing annual profit forecasts below expectations. Critical Metals, with operations in Greenland, rose 8.3%. RAPT Therapeutics surged 63.7% on news of its $2.2 billion acquisition by Britain’s GSK.
Treasury Secretary Scott Bessent defended the Greenland proposal on CNBC, saying, “That will stop any kind of a kinetic war, so why not pre-empt the problem before it starts?”
Bessent added that Trump could decide on a new Federal Reserve chair as early as next week, following threats to indict current Chair Jerome Powell.
Trump, marking one year since returning to office — a period of market volatility including near-bear territory after April’s “Liberation Day” tariffs—is scheduled to address the World Economic Forum in Davos on Wednesday and plans talks with European leaders there.
The week features key economic data, including third-quarter GDP updates, January PMI readings, and the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures report. Earnings reports are due from Netflix, which rose 1.3% ahead of its Tuesday release, as well as from Charles Schwab, Johnson & Johnson, and Intel.
Of the 33 S&P 500 companies reporting through Friday, 84.8% beat analyst estimates, per LSEG data. Analysts project earnings growth of 12% to 15% for the index this year, vital to maintaining bullish momentum.
“We’re seeing a broadening away from the Mag 7 into small and mid-cap companies. And possibly, a broadening away from the U.S. to other markets overseas that have been underperforming,” Lundgren said, per CNBC.
Markets are also monitoring Trump’s Davos speeches and potential Supreme Court rulings on his tariffs.
