A resurgence of geopolitical risk sent US markets lower on Jan. 20 after President Donald Trump hardened his rhetoric over Greenland, raising the prospect of new tariffs and driving a risk-off move across Wall Street. The Dow Jones Industrial Average retreated 1.76% to 48,488.59, while the S&P 500 gave up 2.06% to end at 6,796.94. The Nasdaq Composite recorded the sharpest move, falling 2.39% to 22,954.32, as technology shares bore the brunt of the selloff.
The session marked the weakest finish for all three indexes since early October, underscoring how quickly sentiment has shifted as geopolitical issues return to the forefront of market decision-making. Looking at the year so far, the picture remains uneven. The Dow still shows modest gains of 0.88%, but losses have accumulated in growth-oriented segments, with the Nasdaq down 1.24% and the S&P 500 off 0.71%.
Banamex analysts said international tensions are no longer abstract risks, but factors actively influencing asset prices. Trump’s renewed push regarding Greenland prompted European governments to reaffirm the territory’s sovereignty and reinforce regional security. The response from Washington included warnings of retaliatory tariffs against any country seeking to obstruct US interests, injecting fresh uncertainty into global markets.
GBM Research noted that the situation has already translated into weaker equity prices, pressure on the dollar and higher yields on US Treasuries. Friction with Europe deepened after Trump also floated a potential 200% duty on French wine and champagne, amid indications that France would not support the Peace Board initiative proposed by the US president.
Broad Selloff Highlights Tariff Exposure
The downturn was not confined to a single corner of the market. Ten of the S&P 500’s eleven sectors ended the day in the red, signaling a widespread reduction in exposure. Technology stocks led the retreat, with the sector losing 2.9%. Shares of Broadcom and NVIDIA weakened after several suppliers halted operations due to customs-related interruptions in China, raising concerns about production continuity.
Consumer Discretionary followed closely, declining 2.8%, as Amazon and Tesla slid on worries that further trade barriers could lift costs and complicate logistics. Financials also came under pressure, falling 2.2%, with heavyweight firms such as Berkshire Hathaway and Blackstone contributing to the drop.
The market’s largest technology companies intensified the selloff. The so-called “Magnificent Seven” accounted for a substantial portion of the day’s losses. Combined, NVIDIA, Microsoft, Apple, Alphabet, Amazon, Meta Platforms, and Tesla shed roughly US$654.1 billion in market value in a single session.
NVIDIA led declines on the Nasdaq, sliding 4.38% to US$178.10, while Tesla dropped 4.17% to US$419.25. Apple retreated 3.44% to US$246.75 and Amazon fell 3.40% to US$231. Meta Platforms slipped 2.50% to US$604.77, while Alphabet decreased 2.43% to US$324.64 and Microsoft closed 1.13% lower.
Valmex analysts said the correction reflects escalating geopolitical and commercial strains, fueled by new tariff rhetoric and expectations that Trump could reinforce his stance at the World Economic Forum in Davos, keeping global markets on edge. They added that tighter monetary conditions in parts of Asia are keeping bond yields elevated, reducing the relative appeal of equities and reinforcing the defensive posture adopted by investors.
