Markets Tumble After Trump Threatens Tariffs On Europe Over Greenland

LEAD: U.S. stocks closed sharply lower on Jan. 20, with the S&P 500 falling 143.15 points, or 2.06%, to 6,796.86 — its worst day since October — while the Nasdaq fell 2.39% to 22,954.32 and the Dow declined 1.76% to 48,488.59, according to market data.

CONTEXT: The rout followed a Truth Social post by President Donald Trump on Jan. 17 saying he would impose a 10% import tariff starting Feb. 1 that would rise to 25% on June 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Great Britain until the U.S. secured a deal to purchase Greenland, a proposal Greenland and Danish officials said is "not for sale," Reuters reported.

RESPONSE: European leaders expressed outrage and moved toward an emergency summit on Thursday to consider retaliatory measures, Treasury Secretary Scott Bessent urged calm at the World Economic Forum saying "Everyone take a deep breath," and UBS Chairman and CEO Sergio Ermotti warned there was "no path to normalization in the near future," according to statements and Reuters reporting from Davos.

SCALE: The sell-off broadened globally with the STOXX Europe 600 down about 1.1%, Germany's DAX off 1.2%, Britain's FTSE 100 down 1.0%, the ICE U.S. Dollar Index falling nearly 1%, gold rising above $4,700 per ounce, silver near $95 per ounce, the Cboe Volatility Index spiking to about 20.69 and the 10-year U.S. Treasury yield rising to roughly 4.265%, according to market data and Reuters.

FORWARD: Traders said they will monitor an EU emergency summit on Thursday, the scheduled Feb. 1 tariff start and June 1 increase, President Trump's planned Davos address on Wednesday, the Jan. 22 personal consumption expenditures inflation report and next week's Federal Reserve policy meeting for signs of whether the shock will be transitory or prompt further market and policy responses, market participants and legal analysts said.