U.S. stocks opened sharply lower on Tuesday, while European markets also retreated, as investors voiced growing concern over President Donald Trump’s confrontation with European leaders regarding the ownership of Greenland. At the same time, political uncertainty in Japan following an early election rattled Asian markets, sending Japanese government bond yields sharply higher and adding to global financial stress.
Shortly after the opening bell, the Dow Jones Industrial Average was down 754 points, or 1.53 percent. The broader S&P 500 fell 1.52 percent, while the tech-heavy Nasdaq Composite declined 1.8 percent. Both the S&P 500 and the Nasdaq erased their year-to-date gains. Market volatility surged, with the VIX index—often referred to as Wall Street’s “fear gauge”—jumping 24 percent and briefly rising above the 20 level for the first time since November, signaling heightened investor anxiety.
Investors also revived the so-called “sell America” trade, unloading U.S. assets including the dollar and Treasury bonds. The U.S. dollar index, which measures the currency against six major peers, dropped 0.85 percent, a significant move in foreign exchange markets, and was on track for its worst session since August.
In the bond market, the yield on the benchmark 10-year U.S. Treasury rose to 4.28 percent, while the 30-year yield climbed to 4.91 percent. Both reached their highest levels since September, reflecting falling bond prices amid heavy selling pressure.
Additional strain came from Japan, where bond yields surged following concerns over Prime Minister Sanae Takaichi’s proposal to temporarily cut food taxes despite the country’s already heavy public debt burden. Rising Japanese yields have added tension to global debt markets.
“It’s very difficult to disentangle how much of this is coming from Japan,” U.S. Treasury Secretary Scott Bessent said on Tuesday during a discussion with Maria Bartiromo at the World Economic Forum in Davos. He added that he had been in contact with Japanese economic counterparts and expressed confidence that officials would take steps to reassure markets.
