European Leaders Push Back as Davos Meeting Looms
Since Trump made his tariff threat against eight NATO members on Saturday, he has upped his attack on France and the U.K. and has taken the stand that the move to purchase is being driven by national security reasons. European leaders have deemed Trump’s fresh tariff measures as “unacceptable”. Meanwhile, they are considering aggressive countermeasures that could have devastating impacts on growth on both sides of the Atlantic.
Trump is scheduled to speak at the World Economic Forum in Davos, Switzerland, where he is expected to meet with European leaders to present his Greenland ambitions.
Classic Risk-Off Trade Hammers Stocks, Treasuries, and Dollar
The markets are responding to Trump’s tariff threat in textbook fashion. When a clear risk-off situation creates uncertainty, investors are trained to hedge their risks, which includes selling stock, selling the dollar and selling U.S. Treasuries. The impact of a “Sell America” strategy has clear consequences: stocks drop sharply when there is blanket selling, yields rise sharply when U.S. Treasuries are dumped and the dollar falls swiftly as foreign investors bring money back home. Meanwhile, these moves help drive hard assets like gold and silver higher.
Tech and Consumer Discretionary Lead Sector Declines
The S&P 500 sectors’ performance reflects the risk-off selling pressure. With nowhere to hide as investors clean house until the problem goes away, 10 out of 11 major sectors are lower. Both Technology and Consumer Discretionary sectors are taking the biggest hits, down 2.04% and 2.08%, respectively. The lone winner is Energy, but it’s barely hanging on with a slight 0.15% gain.
Individual Stock Movers: NetApp Plunges While SanDisk Surges
The biggest losing stocks for the session are NetApp Inc (-7.232%), Hewlett-Packard Enterprises (-6.04%) and 3M Co. (-5.775%). Top-performing stocks include SanDisk (+7.5%), Intel (+5.433%) and Expand Energy Corp (4.556%).