Stocks in the US and Europe faltered Tuesday following escalating tensions sparked by President Trump's push for Greenland and related tariff threats. The Dow dropped by 763 points (1.54%), the S&P 500 fell 1.78%, and the Nasdaq Composite declined 2.02%, wiping out year-to-date gains.
Beyond equities, currency markets reflected unease. The US dollar index plunged nearly 1%, its worst drop since April, while the euro strengthened 0.7% against the greenback. Treasury yields climbed, with the 10-year note jumping to 4.28% and the 30-year yield to 4.9%, marking the highest levels since September.
Asian markets also reacted to a snap election in Japan, which drove Japanese bond yields higher, adding to the global bond jitters. The VIX fear gauge spiked nearly 19%, briefly crossing 20 for the first time since November—signaling increased market volatility.
Despite the tumult, investors remain cautiously optimistic about a potential de-escalation, eyeing the forthcoming US Supreme Court ruling on the legality of Trump's tariff authority as a possible turning point.
