S&P 500 and Nasdaq futures slid to one-month lows on Tuesday as U.S. traders returned from the long weekend to witness risk-off selling, sparked by renewed tariff threats from President Donald Trump against Europe over control of Greenland.
In a sign of global risk aversion, gold prices touched record highs, stocks across the world slid and U.S. Treasuries were sold off. U.S. markets were closed on Monday for Martin Luther King Jr. Day.
Trump said on Saturday additional 10% import tariffs would take effect on February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Great Britain — all already subject to tariffs imposed by the U.S.
The tariffs would increase to 25% on June 1 and would continue until a deal was reached for the U.S. to purchase Greenland, Trump wrote in a post on Truth Social. Leaders of Greenland, an autonomous territory of Denmark, and Denmark have insisted the island is not for sale.
"We're not in panic territory, but it's worth watching defense companies and gold miners. Tariffs might nudge everyday prices up slightly, keeping inflation in focus," said Kate Leaman, chief market analyst at AvaTrade.
"Trade wars create ups and downs, but history favors the prepared." Critical Metals (CRML.O), opens new tab, which has a strategic presence in Greenland, jumped 6.8% in premarket trade. The CBOE Volatility index (.VIX), opens new tab, also known as Wall Street's fear gauge, touched a two-month high at 20.61 points.
At 06:53 a.m. ET, Dow E-minis were down 627 points, or 1.27%, S&P 500 E-minis were down 105.25 points, or 1.51%, Nasdaq 100 E-minis were down 481 points, or 1.88%.
Investors headed into a jam-packed week, with a slate of market-moving data such as the third-quarter U.S. GDP update, January PMI readings and the Personal Consumption Expenditures report, which is the Federal Reserve's preferred inflation gauge.
Earnings season is also kicking into a higher gear. Several industry bellwethers, including Intel (INTC.O), opens new tab, Netflix and (NFLX.O), opens new tab, are set to report their quarterly earnings this week.
Netflix, due to report after the bell on Tuesday, gained 0.7%, while industrial giant 3M (MMM.N), opens new tab fell 4.6% despite beating quarterly profit estimates. Of the 33 S&P 500 companies that had reported as of Friday, 84.8% topped analysts' expectations, according to data compiled by LSEG.
Markets are also watching the potential for a Supreme Court decision tied to Trump's tariffs, alongside speeches by global leaders at the World Economic Forum in Davos, Switzerland.
Trump may reach a decision on the next chairman of the U.S. Federal Reserve as early as next week, U.S. Treasury Secretary Scott Bessent said a CNBC interview - keeping markets on edge after the Trump administration last week threatened to indict Chair Jerome Powell.
Among stocks, RAPT Therapeutics (RAPT.O), opens new tab soared 63.7% in premarket trading after Britain's GSK (GSK.L), opens new tab agreed to buy the U.S. firm for $2.2 billion, adding global rights to the experimental food allergy drug ozureprubart to its respiratory and immunology portfolio.
