In a turbulent day on Wall Street, fears of a "Sell America" wave gripped investors, leading to a steep decline in US stocks, bonds, and the dollar. President Donald Trump's threat of a "Greenland tariff" on Europe has sent shockwaves through the markets, erasing the year-to-date gains of the S&P 500 and causing significant volatility across the board.
On January 20th, the Dow Jones Industrial Average closed down by 870.74 points, or 1.76%, at 48,488.59. The S&P 500 fell by 2.06%, closing at 6,796.86, while the Nasdaq Composite dropped 2.39% to finish at 22,964.32. This marks the largest single-day decline for the S&P 500 in three months, a stark reversal from its record highs earlier in the year.
The market volatility index, often referred to as the "fear gauge," rose to its highest level in two months, reflecting the heightened investor anxiety. Trump's threats to impose tariffs on European countries unless they acquiesce to the US acquisition of Greenland have rekindled fears of a broader sell-off in American assets.
Major tech stocks were not spared, with giants like Nvidia, Tesla, Apple, Amazon, and Alphabet seeing significant declines. The threat of escalating trade tensions, particularly with France over potential tariffs on wine and champagne, has further compounded investor concerns.
In the bond market, US Treasury yields surged, driven by the fallout from Trump's tariff threats and rising Japanese government bond yields. The 10-year Treasury yield hit 4.29%, its highest level in four months, while the 30-year yield also reached a similar peak.
Amid these developments, the dollar continued to weaken, with the Dollar Index dropping 0.8% against a basket of major currencies. Ray Dalio, founder of Bridgewater Associates, cautioned against the potential for a capital war, suggesting that foreign investors might shy away from US assets.
As investors seek safe havens, gold prices have surged, surpassing $4,700 per ounce to hit a new record high. Silver prices have also rallied, continuing their dramatic rise from the previous year.
The day's market movements underscore the fragility of the current economic environment, with Trump's aggressive trade posture serving as a catalyst for uncertainty. As global tensions rise, the stability of US markets remains precarious, leaving investors to navigate a complex landscape fraught with risk.
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