Welcome back from the long weekend. Wall Street chose violence on Tuesday, reopening after Martin Luther King Jr. Day with a solid selloff as President Donald Trump decided to remind everyone that trade wars are still very much on the menu.

The S&P 500 tumbled 1.5% to 6,840, marking its worst session since late November. Consumer discretionary and technology stocks led the retreat, with the Nasdaq 100 falling 1.4% and the Dow Jones Industrial Average sliding 1.3%. Even the small-cap Russell 2000 couldn't escape, dropping 0.8%.

Trump Cranks Up the Tariff Threats

So what sparked this delightful bout of risk-off sentiment? Trump threatened several European countries with an additional 10% tariff starting February 1 if negotiations over Greenland control fail. And if you think that sounds aggressive, wait—he suggested those duties could potentially rise to 25% from June onward.

European officials weren't exactly thrilled with this development. They warned of retaliation that could affect up to 25% of U.S. exports to Europe, potentially including services, and even floated the possibility of reducing Treasury holdings. Trump also personally warned French President Emmanuel Macron that tariffs as high as 200% could be slapped on French wines and champagne, which seems like a creative way to make California vineyards happy.

Markets are now laser-focused on Trump's appearance Wednesday at the World Economic Forum in Davos, where presumably more surprises await.

Bonds, Gold, and the Great Safe-Haven Scramble

The risk-off mood spilled into fixed income in a big way. Long-dated Treasury yields climbed to their highest levels since late September, with the 30-year yield rising 6 basis points to 4.90%. The iShares 20+ Year Treasury Bond ETF (TLT) fell about 1% as yields headed north.

Meanwhile, safe-haven demand pushed precious metals to fresh highs that would make gold bugs giddy. Gold jumped 1.9% to $4,760 per ounce, while silver absolutely surged nearly 5% to $94.50 an ounce. Apparently when the trade war drums start beating, investors remember that shiny rocks have been money for thousands of years.

In a completely separate drama, colder-than-expected weather forecasts sent U.S. natural gas prices soaring more than 24%, marking the biggest one-day gain since late October 2024. Mother Nature decided to join the volatility party.

Crypto Gets Crushed

Bitcoin sunk over 3% below $90,000, which sounds painful until you remember it was trading around $16,000 just over two years ago. Still, the decline sent shares of Strategy Inc. (MSTR) tumbling nearly 8%, proving once again that leveraged bets on crypto can amplify moves in both directions.

Earnings Season: Good Numbers, Bad Vibes

Here's where things get interesting. All major companies reporting before the open actually topped estimates, but investor reaction remained deeply cautious. 3M Company (MMM) slid more than 7% despite beating expectations because the company warned that tariff uncertainty is clouding its outlook. Turns out guidance matters just as much as historical results when everyone's worried about a trade war.

DR Horton Inc. (DHI) slipped 0.5% despite stronger-than-expected results, continuing the theme of "good isn't good enough right now."

A couple of banks managed to buck the trend. U.S. Bancorp (USB) gained 0.5%, while Fifth Third Bancorp (FITB) rose 2% following earnings beats. Sometimes financials just march to their own drummer.

After the close, investors are awaiting results from Netflix Inc. (NFLX), United Airlines Holdings Inc. (UAL), and Interactive Brokers Inc. (IBKR). Given today's mood, those companies better deliver some seriously impressive numbers.

Tuesday's Performance in Major US Indices and ETFs

Looking at the exchange-traded fund landscape, the damage was widespread:

• The iShares Russell 2000 ETF (IWM) fell 0.7% to $264.01.
• The SPDR Dow Jones Industrial Average ETF (DIA) slid 1.3% to $486.89.
• The Invesco QQQ Trust (QQQ) dropped 1.6% to $611.56.
• The Vanguard S&P 500 ETF (VOO) declined 1.5% to $626.33.
• The Consumer Staples Select Sector SPDR Fund (XLP) led gains, up 0.4% to $82.46, because apparently people still need to eat regardless of tariff threats, while the Consumer Discretionary Select Sector SPDR Fund (XLY) sank 2.1% to $119.78.

Russell 1000's Top Gainers

Russell 1000's Top Losers