By Joseph Adinolfi
U.S. stocks are on track for their biggest drop of 2026
President Trump's latest round of tariff threats, aimed at pressuring Europe to back a U.S. bid for Greenland, are stoking market instability.
Talk of the &#34;Sell America&#34; trade is making a big comeback this week as President Donald Trump's latest tariff threats against European allies threaten a rerun of last April's violent market spasms.
U.S. stock futures were pointing toward a sharp drop at the open, setting the major indexes up for their worst session of 2026. Nasdaq-100 futures (NQ00) were off by 451 points, or 1.8%, at 25,235. S&amp;P 500 futures (ES00) were off by 106 points, or 1.5%, at 6,869. Dow Jones Industrial Average (YM00 ) futures were off by 713 points, or 1.5%, at 48,829. Small- and midcap stocks, which have outperformed their larger rivals in January, were also set to slide Tuesday.
Over the weekend, Trump said he would slap 10% tariffs on imports from eight European countries beginning next month. He later threatened tariffs as high as 200% on French wine and other products after French President Emmanuel Macron rebuffed Trump's offer to join his Gaza peace board. Trump will speak at the World Economic Forum in Davos, Switzerland, on Wednesday.
The new tariff threats were putting more than U.S. stocks under pressure. Yields on long-dated Treasury notes and bonds were moving higher, while the U.S. dollar was selling off. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was up 7 basis points at 4.295%, according to FactSet data. The ICE U.S. Dollar Index DXY, which tracks the dollar's value against a basket of rivals, was off by 1% at 98.45.
&#34;I'm concerned on a lot of different levels that the president has pushed it way too far,&#34; Kent Engelke, chief economic strategist at Capitol Securities Management, said Tuesday morning.
Of note, the 30-year Treasury yield BX:TMUBMUSD30Ywas up 9 basis points to 4.93%.  Engelke said he thinks the yield could &#34;very easily&#34; go up to 5%.
Some were seeing similarities early Tuesday with how markets were reacting to Trump's April tariff threats.
&#34;FYI - something we haven't seen since liberation day, on the risk reaction front, is the gap higher in [10-year yields],&#34; Dennis DeBusschere, chief market strategist at 22V Research, said in commentary shared with MarketWatch via email.
So far, the reaction has been modest compared with what investors experienced in the aftermath of Trump's &#34;liberation day&#34; tariff proposals. The S&amp;P 500 SPX skidded right to the edge of bear-market territory in April before the Trump administration announced a 90-day pause.
While U.S. stocks were on track to see a big drop on Tuesday as markets reopened following a Monday holiday, investors around the world were feeling the heat as well.
The European STOXX 50 XX:SX5P was falling for a third day, adding to its losses from Monday's session. The Japanese Nikkei 225 JP:NIK and Hong Kong's Hang Seng index (HK:11) fell for a fourth straight day. The iShares MSCI Emerging Markets exchange-traded fund EEM was on track to open lower, FactSet data showed.
In Japan, local government bonds were selling off hard. The yield on the Japanese 40-year bond BX:TMBMKJP-40Y was up 27 basis points at 4.215%, the highest yield ever recorded, according to FactSet. Bond yields move inversely to prices.
Bitcoin (BTCUSD) was lower on Tuesday, down 2.2% at $90,958 a coin in recent trade.
One exception to the wave of selling pressure was gold and silver, which were getting another big boost, sending both to fresh record highs. Silver (SI00) was up 7.3% at $94.94 an ounce in recent trading, based on action in its most-active futures contract, FactSet data showed. Gold (GC00) was up 2.8% at $4,723 an ounce.
Joy Wiltermuth contributed.
-Joseph Adinolfi
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
01-20-26 0917ET

<p>U.S. stocks are poised for their largest drop of 2026 due to President Trump's new tariff threats against Europe, reviving the "Sell America" trade. Futures indicate significant declines across major indexes, with the Nasdaq-100 down 1.8% and S&P 500 down 1.5%. The 10-year Treasury yield rose to 4.295%, while the U.S. dollar fell by 1%. Global markets are also under pressure, with European and Asian indices declining. In contrast, gold and silver prices surged to record highs amid the market turmoil.</p>

- U.S. stocks are poised for their largest decline of 2026 due to President Trump's new tariff threats against Europe, reminiscent of market volatility in April 2025.  
- Futures for major indexes indicate a significant drop, with Nasdaq-100 down 1.8%, S&P 500 down 1.5%, and Dow Jones down 1.5%, amidst increasing Treasury yields and a depreciating dollar.  
- The global market is also feeling pressure, with European and Asian stock indices continuing their decline, while gold and silver prices are reaching record highs.

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The 'Sell America' trade is making a comeback - but investors are selling most everything else, too