U.S. stocks experienced a significant decline, with the S&P 500 falling by 1.9%, the Dow Jones Industrial Average decreasing by 1.7%, and the Nasdaq Composite dropping 1.9%. This downturn was primarily influenced by heightened trade tensions, as President Trump announced potential new tariffs starting at 10% on February 1st and escalating to 25% by June. These tariffs target eight European countries due to their opposition to U.S. influence over Greenland, creating uncertainty in cross-border trade assumptions.
Investor unease was further exacerbated as Treasury yields surged. News that a Danish pension fund intends to reduce its holdings of U.S. Treasuries contributed to the prevailing risk aversion, impacting rate-sensitive and growth stocks. The tech sector and semiconductor stocks were particularly affected, with major declines in Nvidia (-4.4%), Broadcom (-5.4%), and Oracle (-5.8%) as investors trimmed their positions in high-beta stocks. Similarly, the cyclicals and industrials sectors also registered losses.
Corporate developments provided limited reassurance; 3M plunged 7%, issuing weaker guidance despite surpassing revenue expectations. Meanwhile, Netflix's shares fell by 1.1% amid speculation about its potential all-cash bid for Paramount.
