Transatlantic tariff war on the brink…Nasdaq falls 2.39% [New York stock market briefing]

All three major U.S. stock indexes in New York closed lower. As tensions between the United States and the European Union (EU) over Greenland, a Danish territory, escalated, investor sentiment froze. Prices for gold, a safe-haven asset, surged.

On the 20th (local time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 870.74 points (1.76%) from the previous session to close at 48,488.59. The Standard & Poor’s (S&P) 500 Index dropped 143.15 points (2.06%) to 6,796.86, while the Nasdaq Composite slid 561.07 points (2.39%) to end at 22,954.32.

By sector, all groups declined except consumer staples. Financials, industrials, consumer discretionary, communication services, technology, and real estate tumbled by around 2%.

Investor sentiment weakened as the crisis sparked by Trump’s trade war intensified. U.S. President Donald Trump said he would impose tariffs of 10% starting next month on the 1st, and 25% starting June 1, on eight European countries that deployed troops to Greenland.

In response, the EU is countering with a tariff package on U.S. goods worth 93 billion euros and is also considering triggering its Anti-Coercion Instrument (ACI), a trade-defense measure dubbed a “trade bazooka.” The ACI is a legal mechanism designed to enable the EU to respond swiftly and forcefully at the bloc level when a third country outside the EU applies economic pressure on the EU or a specific member state.

Experts voiced concern that the situation could spill over into a “capital war.” Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, warned in a CNBC interview that “behind trade deficits and trade wars lies capital and a capital war,” adding that “as conflicts intensify, the inclination to buy U.S. debt (Treasuries) could diminish.”

As uncertainty rose, the CBOE Volatility Index (VIX), known on Wall Street as the “fear gauge,” climbed 6.63% from the prior session to 20.59. It was the first time the VIX topped 20 since last November. On the 19th, it had surged 18.79%.

With Tesla down 4.17%, the mega-cap tech “Magnificent Seven” (M7) stocks all ended in the red. Nvidia, Alphabet, and Amazon slid more than 2%. Microsoft (MS) and Apple also fell more than 1%. Concerns that the Trump administration’s tariff policies could disrupt global supply chains and raise cost burdens for Big Tech companies fueled selling.

The Philadelphia Semiconductor Index, which had been strong day after day, also fell 1.68%. TSMC and Broadcom sank by around 5%, while ASML and Applied Materials posted declines in the 2% range.

Meanwhile, gold futures, a representative safe-haven asset, rose 3.78% from the previous session to trade at $4,769.1 per ounce. It was near a record high. Silver futures also jumped more than 6% to top $94.

In after-hours trading, Netflix is down in the 4% range. While its fourth-quarter results last year beat market expectations, many investors are seen as concerned about the cost burden after it agreed to acquire Warner Bros. Discovery in an all-cash deal.

Jin Young-gi, Hankyung.com reporter young71@hankyung.com