Wall Street sees biggest drop in three months as Trump tariff fears return

Market Overview - All three major U.S. equity indexes experienced their largest one-day declines in three months, with the S&P 500 dropping 143.15 points (2.06%) to 6,796.86 points, the Nasdaq Composite falling 561.07 points (2.39%) to 22,954.32, and the Dow Jones Industrial Average decreasing by 870.74 points (1.76%) to 48,488.59 [2][3]. Tariff Concerns - President Trump's announcement of additional 10% import tariffs on goods from several European countries, effective February 1, has raised concerns about renewed market volatility. These tariffs could increase to 25% on June 1 unless a deal is reached regarding the purchase of Greenland [5][6]. Investor Sentiment - Despite the selloff, some analysts suggest that the market reaction may not indicate a long-term trend, with no significant signs of investors fleeing the market. Jamie Cox from Harris Financial Group noted that he would be surprised by a 3% to 5% drop within the week [7][8]. Bond Market Impact - The bond markets reacted significantly, with Japanese government bonds experiencing a plunge, leading to record high yields. This situation has also affected European government bonds and U.S. Treasuries, particularly on the long end of the curve [9]. Economic Data and Earnings - The U.S. economy remains robust, with upcoming data releases including the third-quarter GDP update, January PMI readings, and the Personal Consumption Expenditures report, which is the Federal Reserve's preferred inflation gauge. Additionally, earnings season is ramping up, with major companies like Netflix set to report quarterly earnings [10][11].