Risk aversion frenzy hits global stock markets, three major US stock indices suffer heavy losses

On January 20, 2026, the US stock market experienced its worst crash in recent times. The Trump administration's new tariff threats against European allies ignited market panic, causing risk aversion sentiment to explode instantly. This wave of selling wiped out all gains since the beginning of the year, bringing the three major indices back to their original levels.

Specifically, the S&P 500 index was halved, dropping 143.15 points, a decline of 2.06%, closing at 6796.86 points; the Nasdaq fared even worse, plummeting 561.07 points, a decrease of 2.39%, closing at 22954.32 points; the Dow Jones also fell, down 870.74 points, a decline of 1.76%. Even more exaggerated, the VIX fear index soared to 20.99 points, hitting a new high in nearly two months—what does this number indicate? The market's fear index has already exploded.

Greenland dispute sparks "Trade War 2.0" concerns

The trigger for this stock market crash is quite straightforward. The US government announced that because European countries oppose US acquisition of Greenland, the US will impose a 10% general tariff on eight NATO allies including Denmark, Norway, Sweden, Germany, and France starting February 1. The implication is even harsher—if diplomatic negotiations break down, the tariff rate will double to 25% in June.

US-France trade relations have also sharply deteriorated. Authorities announced plans to impose tariffs of up to 200% on French wine and champagne. These series of actions have made the market smell "Trade War 2.0," and investors' nerves are tightly stretched.