Dow Jones plunges 700 points today: Why US markets are tumbling

The US stock market witnessed a sharp sell-off on Tuesday as President Donald Trump’s renewed tariff threats unsettled investors and triggered widespread risk aversion on Wall Street.

The Dow Jones Industrial Average dropped around 700 points, or about 1.5 per cent, marking one of its steepest single-day losses in recent weeks. The S&P 500 declined roughly 1.4 per cent, while the Nasdaq Composite slid close to 1.7 per cent, reflecting broad-based weakness across sectors.

Market volatility surged, with the Cboe Volatility Index climbing above the 20 mark for the first time since late November, signalling heightened investor anxiety. Technology stocks led the decline, with shares of Nvidia, AMD and Alphabet falling more than 2 per cent as rising Treasury yields weighed on growth-focused companies.

Also read: Silver hits record on MCX as Trump’s Greenland tariff threat sparks US-EU trade fears

The sell-off followed Trump’s announcement that the US would impose escalating tariffs on imports from eight NATO countries — including Denmark, France, Germany, the UK and the Netherlands — unless an agreement is reached for the “complete and total purchase of Greenland.” Under the proposal, tariffs would begin at 10 per cent from February 1 and increase to 25 per cent by June 1 if negotiations fail. Trump also warned of possible 200 per cent tariffs on French wines and champagne amid diplomatic tensions.

European leaders strongly criticised the move, with officials signalling potential countermeasures. The threat of retaliatory action raised fears of a wider trade conflict involving key US allies, adding pressure to global equity markets. Major European indices including the CAC 40, DAX and FTSE 100 also closed lower amid the uncertainty.

Beyond trade concerns, geopolitical tensions added to market stress. Ongoing unrest in Iran, coupled with heightened Israel–Iran tensions, reinforced investor caution due to potential spillover effects on energy markets and global supply routes.

As investors moved away from equities, demand for safe-haven assets increased. Gold and silver prices rose sharply, while the US dollar weakened against major currencies. Treasury yields climbed as bond prices fell, indicating a broader repricing of risk across financial markets.

With earnings season underway and geopolitical risks intensifying, analysts expect market volatility to remain elevated in the near term as investors balance corporate performance against growing global uncertainty.

Published: 20 Jan 2026, 09:35 pm IST

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