U.S. equity markets opened the week on a sharply lower note on Tuesday, with technology shares bearing the brunt of investor unease over President Donald Trump’s escalating rhetoric on acquiring Greenland and his threats of punitive tariffs against European allies.
The sell-off reflected broader concerns about renewed transatlantic trade tensions, just as global leaders converged on Davos, Switzerland, for the World Economic Forum. The State Street Technology Select Sector SPDR ETF (XLK) declined 1%, while major tech names posted steeper losses. Nvidia and Tesla each tumbled nearly 3%, with Meta Platforms, Alphabet, Apple, Microsoft, and Amazon all shedding more than 1%. Broader indexes followed suit: the Nasdaq Composite closed down 1.3%, underperforming the S&P 500’s 1.1% drop and the Dow Jones Industrial Average’s 0.9% decline.
The catalyst came from Trump’s Truth Social posts over the weekend, where he reiterated his long-standing interest in U.S. control of Greenland—an autonomous Danish territory he views as strategically vital for national security, Arctic defense, and countering influence from China and Russia.
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In a lengthy January 17 post, Trump announced plans for a 10% tariff on goods from eight European nations—Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland—effective February 1, escalating to 25% on June 1. He tied the levies directly to negotiations for a “Complete and Total purchase” of Greenland, framing the move as essential for “Global Peace and Security.”
Trump doubled down on Tuesday with a flurry of posts, sharing what appeared to be private messages from leaders like French President Emmanuel Macron, mocking allies, and insisting “there can be no going back” on his ambitions. He even posted edited images depicting Greenland and parts of Canada under U.S. flags, while refusing to rule out forceful options if diplomacy fails.
European leaders responded with alarm. EU Commission President Ursula von der Leyen called the tariff threats a “mistake” that undermines trust between allies. French President Emmanuel Macron warned of a potential shift to a “world without rules” and signaled readiness to activate the EU’s anti-coercion instrument—a so-called “trade bazooka”—for retaliatory measures worth billions.
Belgian Prime Minister Bart De Wever declared that “so many red lines have been crossed,” while others in Davos urged compartmentalizing the Greenland dispute from broader trade talks. U.S. Trade Representative Jamieson Greer, speaking at Davos, suggested the threats were tactical to “set the scene” for negotiations, downplaying immediate escalation.
Treasury Secretary Scott Bessent brushed off market “hysteria,” but investors remained skittish, with the CBOE Volatility Index (VIX) spiking to levels not seen in recent months.
The renewed focus on tariffs revives memories of trade frictions from Trump’s first term, now complicated by Greenland’s strategic importance amid melting Arctic ice and great-power competition. Analysts note that any broad tariffs could disrupt supply chains for U.S. tech firms reliant on European components, markets, or partnerships, amplifying the “risk-off” sentiment hitting AI and growth stocks hardest.
Yet not all voices were bearish. Wedbush Securities analyst Dan Ives, attending Davos, framed the dip as a classic buying opportunity.
“Tech stocks will be hit as the ‘risk off dynamic’ hits AI names front and center but ultimately we view this as an opportunity to own the tech winners for 2026 and beyond,” Ives wrote in a note to clients.
He dismissed the geopolitical “soap opera” as temporary noise, arguing that the AI revolution remains in its early innings and unaffected by short-term trade spats.
Ives pointed to an impending catalyst: a “robust” fourth-quarter earnings season from tech giants, fueled by an estimated $550 billion in capital expenditures dedicated to AI infrastructure. He recommended accumulating shares on weakness in names like Nvidia, Microsoft, Palantir, CrowdStrike, Nebius, Apple, Palo Alto Networks, Alphabet (Google), and Tesla—stocks he sees as core beneficiaries of the ongoing “4th Industrial Revolution.”
While the tariff threats contributed to Tuesday’s losses, tech had already shown signs of rotation fatigue earlier in January, with the “Magnificent Seven” group underperforming amid valuation concerns. The pullback erased recent gains and pushed some indexes into negative territory for the year so far.
As Davos proceedings continue—with Trump scheduled to address attendees on Wednesday—investors will monitor for any de-escalation signals. European retaliation threats and potential Supreme Court scrutiny of tariff authority loom as additional risks.