Wall Street sees worst day since October after Trump tariff threats

• Trump threatened 10% tariffs starting February 1 on eight European nations (UK, France, Germany, Denmark, Sweden, Netherlands, Norway, Finland), rising to 25% by June 1, and separately threatened 200% tariffs on French wines
• Major tech stocks suffered significant losses: Amazon down 2.9%, Tesla and Nvidia each down over 3%, while gold hit a record high above $4,700 per ounce and silver reached $95.52 as investors sought safe havens
• Commerce Secretary Howard Lutnick downplayed trade war risks at Davos, calling the situation a 'kerfuffle' likely to end in diplomacy, while UK Chancellor Rachel Reeves urged de-escalation and called on the US to remember its allies

Market Summary: Wall Street Tumbles on Trump Tariff Threats

Market Performance:

US markets experienced their worst trading day since October on Tuesday, with the S&P 500 falling 1.5%, the Dow Jones declining 1.3%, and the tech-heavy Nasdaq dropping 1.8%. Major tech stocks suffered significant losses: Amazon fell 2.9%, while Tesla and Nvidia each dropped over 3%, erasing billions in market value.

European markets also declined, with the UK's FTSE 100 down 0.7%, France's CAC off 0.6%, Germany's DAX falling 1%, and Italy's FTSE MIB down 1.1%. The dollar weakened 0.9% against a basket of currencies.

Key Catalyst:

The sell-off was triggered by President Trump's Saturday announcement threatening tariffs on eight European countries—including the UK, France, Germany, Denmark, Sweden, the Netherlands, Norway, and Finland—linked to his push for US control of Greenland. Tariffs are set to begin at 10% on February 1, escalating to 25% by June 1. Trump also threatened 200% tariffs on French wines and champagne.

Official Response:

Commerce Secretary Howard Lutnick, speaking at the World Economic Forum in Davos, downplayed trade war concerns, characterizing tariffs as diplomatic tools. Treasury Secretary Scott Bessent urged European nations not to retaliate, comparing market reaction to earlier tariff-related "hysteria."

UK Chancellor Rachel Reeves called for de-escalation while reminding the US of its western alliances.

Market Implications:

Investors fled to safe-haven assets, pushing gold above $4,700 per ounce and silver to a record $95.52 per ounce. Analysts warn the "man-made crisis" could intensify without de-escalation. Trump is scheduled to address Davos on Wednesday.