Wall Street experienced its worst trading day in three months as benchmark indices sold off sharply following the long weekend. The massive decline was driven by President Trump's tariff threats and escalating geopolitical tensions over Greenland, which triggered broad-based selling across all major market segments.
Major Index Performance
The market carnage was evident across all major indices, with technology stocks bearing the brunt of the selling pressure.
| Index: |
Performance |
| Dow Jones: |
Fell nearly 900 points |
| S&P 500: |
Declined over 2% |
| Nasdaq: |
Collapsed over 2% |
| Big Tech Market Cap Loss: |
Over $700 billion |
Currency and Bond Market Movements
The sell-off extended beyond equities, impacting currency and bond markets significantly. The US Dollar index weakened against both major and emerging market currencies, while Bitcoin fell below the $90,000 mark. The yield on the 10-year Treasury bond reached a four-month high, with selling pressure intensified by earlier declines in Japanese bonds.
Wall Street's fear gauge, the VIX, crossed the 20 mark, reaching its highest level since November, reflecting heightened market anxiety and volatility expectations.
Haven Assets Rally
As risk appetite deteriorated, investors flocked to traditional safe-haven assets. Precious metals continued their strong performance, with both gold and silver hitting new peaks.
| Asset: |
Current Level |
| Spot Gold: |
Above $4,750 per ounce |
| Spot Silver: |
Nearing $95 per ounce |
Danish Pension Fund Exit
Adding to market pressure, the Danish Pension Fund announced its decision to exit US Treasury positions worth $100 million, citing "poor US government finances." While the pension fund's chief stated that the Greenland crisis was not directly related to this decision, it reportedly made the choice easier to implement.
Market Outlook and Analysis
Analyst opinions remain divided on the market's direction. Some Wall Street analysts believe in another "TACO" (Trump Always Chickens Out) trade scenario, similar to previous instances when reactions to policy moves became disproportionate. However, others remain skeptical given Trump's adamant stance on Greenland despite European leaders' defiance.
Deutsche Bank warned of potential for further price movements if the current rhetoric escalates. Meanwhile, Bank of America's latest fund manager survey, conducted before recent events, indicated market sentiment at "hyper-bull" levels, suggesting investors should increase risk hedges and haven exposure. Invesco noted that Tuesday's market moves support their thesis of a weak USD, US underperformance, and higher precious metal prices.
Market participants are now focusing on Trump's upcoming address at the World Economic Forum in Davos for further direction.
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