Stocks Tumble as Trump Escalates Greenland Push

Published as of: January 20, 2026, 9:18 a.m. ET

(Tuesday market open) Stocks were set to tumble Tuesday after President Donald Trump escalated his push for control of Greenland, threatening tariffs against a number of European countries, triggering pledges of retaliation. Nasdaq futures fell nearly 2%, while the dollar and bonds slumped. The CBOE Volatility Index, Wall Street's "fear gauge," jumped nearly 8%, topping the 20 mark.

Earnings season picks up again this week, with Netflix (NFLX), Johnson & Johnson (JNJ), and Intel (INTC) among the big names slated to release. On the economic side, the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures Index, or PCE, comes out Thursday. A decision on Trump's tariff regime from the U.S. Supreme Court could come as early as today.

Markets closed slightly lower Friday after spending much of the day in positive territory. Tech stocks held up well though, with chipmakers again posting solid gains. Treasuries fell, pushing yields to the highest level since September, after President Trump expressed reluctance to make Kevin Hassett the next Fed chairman. Small cap stocks outperformed, with the Russell 2000^® Index eking out a gain at the end of a strong week. The small cap index has beaten the S&P 500 index for 11 consecutive days.

1. Is the bond market "snooze" over?: The first two weeks of January have seemed like a long year, with heightened geopolitical uncertainty, including U.S. military action in Venezuela, and a criminal investigation into Fed Chairman Jerome Powell. Meanwhile, U.S. Treasuries have been "sort of snoozing through everything," as my colleague, Kathy Jones, chief fixed-income strategist at the Schwab Center for Financial Research (SCFR), described it, noting concern about the market's complacency. That was until Friday afternoon, when the 10-year yield broke above its remarkably narrow recent range to close above 4.2% after President Trump signaled that he might keep Hassett, director of the National Economic Council, in his current role rather than appoint him Fed chairman. Hassett is seen as potentially more dovish than former Governor Kevin Warsh, who is widely seen as the other leading candidate. A sustained move above 4.2% might trigger a need to reconsider the outlook for equities. The next big data drop for bond traders comes Thursday with the release of the closely watched PCE prices index.
    
2. The EM AI trade: It's not just a weaker dollar and accelerating economic growth supporting emerging-market stocks. AI-driven optimism is pushing up earnings estimates for EM equities but they're still attractively valued. In Asia, Chinese internet companies are rapidly adopting AI into their operations, while several large-capitalization companies in Taiwan and South Korea are key links in the global AI infrastructure supply chain. In fact, given the weight of these countries, tech has become a major driver of the MSCI EM Index's performance. Yet the index is trading at a price-to-earnings ratio of about 13.7, just above its long-term average, much lower than the S&P 500's P/E ratio of 22.1. But EM stocks come with certain risks. They tend to be more volatile than developed-market equities, and any indication that those AI-driven earnings will fall short of estimates could spark some of that volatility. "We believe EM deserves a small allocation in investor portfolios, but caution that the more EM acts like a tech stock," said my colleague Michelle Gibley, director of international equity research and strategy at SCFR.
    
3. AI demand lifts industrial output: U.S. factory output unexpectedly rose 0.2% in December but declined 0.7% in the fourth quarter, according to industrial production data released Friday by the Federal Reserve. The manufacturing sector accounts for about 10% of the U.S. economy. The sector has shed jobs every month since April, when President Trump announced sweeping tariffs, and lost a total of 68,000 jobs in 2025. Overall industrial production rose a better-than-expected 0.4% in December, following a revised 0.4% gain in November. That's the strongest two-month period since June and July. This was largely driven by AI-related output, including a surge in output by the utilities sector seeking to meet demand from data centers. Construction of data centers also helped fuel a 1.7% increase in production of electrical equipment, appliances, and components.

3M (MMM) fell nearly 5% in early trade after reporting mixed results for the fourth quarter. It beat earnings expectations but missed on revenue.
 

Nvidia (NDVA) fell nearly 2% pre-market and Amazon (AMZN) fell more than 2% as all of the "Magnificent Seven" tech stocks were hit by the risk-off sentiment.
 

Netflix rose more than 1% ahead of its earnings release after the close. Netflix has also revised its $72 billion offer for Warner Bros. Discovery (WBD) to an all-cash deal, CNN reported.
 

JB Hunt Transport Services (JBHT) fell 1% after reporting a year-on-year decline in revenue for the fourth quarter. The company reported "general soft demand" for final-mile services.
 

JPMorgan Chase (JPM) fell more than 1% in early trade after Trump threatened to sue the bank on Saturday for allegedly "debanking" him following the January 6 riot at the U.S. Capitol.
 

The VIX jumped to as high as 20.69, the highest level since late November.
 

Crude oil (/CL) rose nearly 1% in early trading as traders weighed concerns about geopolitical tensions and supply disruptions.
 

Silver (/SI) jumped more than 7% and gold (/GC) rose nearly 3%, both to fresh records, as investors sought a perceived haven from geopolitical tensions.
 

Bitcoin (/BTC) futures fell nearly 5% and related stocks tumbled. Strategy (MSTR) was down 5% and Coinbase (COIN) nearly 4%.

10-year Treasury yield futures (/10Y–candlesticks) show a breakout of a trading range that has narrowed remarkably in recent months and has held steady in recent weeks despite geopolitical tensions and a criminal investigation of the Fed chairman.