NEW YORK, Jan. 20 (Xinhua) -- U.S. stock markets on Tuesday suffered their sharpest decline since October, as investors reacted to escalating trade tensions following U.S. President Donald Trump's latest tariff threats linked to Greenland.
The Dow Jones Industrial Average plummeted 1.76 percent to 48,488.59. The S&P 500 sank 2.06 percent to 6,796.86, while the Nasdaq Composite Index tumbled 2.39 percent to 22,954.32.
Market instability intensified after Trump recently announced on social media that imports from eight NATO member states would face escalating tariffs -- starting at 10 percent on Feb. 1 and rising to 25 percent by June 1, until a deal is reached for the "complete and total purchase" of Greenland from Denmark.
The geopolitical friction expanded as Trump threatened 200 percent tariffs on French wines and champagnes, citing a lack of cooperation from Paris regarding his "Board of Peace" initiative.
Investors were dumping dollar assets on "fears of prolonged uncertainty, strained alliances, a loss of confidence in U.S. leadership, potential retaliation and an acceleration of de-dollarisation trends," said Tony Sycamore, market analyst at IG, quoted by CNBC.
The heightened uncertainty sent the Cboe Volatility Index, often called Wall Street's "fear gauge," to a high of 20.99. Meanwhile, yields on the 10-year U.S. Treasury climbed to four-month highs, exacerbated by a simultaneous sell-off in the Japanese bond market.
Ten of the 11 primary S&P 500 sectors ended in negative territory. The technology and consumer discretionary sectors were the hardest hit, falling 2.94 percent and 2.82 percent, respectively, as investors weighed the impact of trade barriers on global supply chains. Only the consumer staples sector managed to buck the trend, edging up 0.12 percent.
Within the broader market rout, Netflix shares declined 0.84 percent. The streaming company amended its bid for Warner Bros. Discovery's studio assets to an all-cash offer ahead of its quarterly earnings report due after the closing bell.
Global attention now shifts to the World Economic Forum in Davos, Switzerland, where Trump is expected to deliver a keynote address on Wednesday. ■