Investors took flight from U.S. assets on Tuesday amid a clash of wills over the status of Greenland. But those those anxieties might not hang around for long. President Trump threatened over the weekend to impose 10% tariffs on U.S. imports from eight NATO members – Denmark, Norway, Sweden, France, Germany, the United Kingdom, Netherlands and Finland – until a deal that sells Greenland to the U.S. is reached. The duties would start on Feb. 1 and rise to 25% on June 1. U.S. stocks sold off on the first trading day in the U.S. since the threat, following the three-day Martin Luther King holiday, with each of the major averages falling about 2%. The U.S. dollar also pulled back, gold jumped to a record and U.S. Treasury yields surged, marking a return of last year’s “sell America” trade . “The expectation was we weren’t going to see that in ’26 anymore – the weaponization of tariffs,” Hank Smith, director and head of investment strategy at Haverford Trust, told CNBC. “The markets were kind of expecting that that was in the rearview mirror, that we would have a much more consistent playing field and not the weekly gyrations that we saw throughout ’25.” Doubt it will last Smith is among those on Wall Street who doubt the latest pullback reaction will continue for long, noting that Europe hasn’t yet retaliated. He anticipates that Trump will back down from his tariff threats. Paul Christopher of Wells Fargo Investment Institute has a similar view, saying higher tariffs on European goods are unlikely to go into effect and that Greenland won’t become a U.S. territory. He expects there will be some sort of compromise, and that economic tailwinds will send stocks higher. “This may be unpredictable. It’s may be very public. You may see more headlines, but we doubt that they’re going to be enough, taken singular[ly or] together, to derail what we think is a massive stimulus hit that’s going to come in February, March and April,” the head of global investment strategy said. “We would be buyers. At some point, the markets may get bothered by midterm [elections]. They typically do. We would be looking through that as well.” January could also still end up positive, according to Paul Stanley, chief investment officer at Granite Bay Wealth Management, boosted by strong tech earnings. “That’s going to be a bigger deal,” he said. “If we get 14% earnings growth, nobody’s going to care what Trump’s threatening with Greenland.” Tech-led downside Tech led the losses on Tuesday. The Invesco QQQ Trust (QQQ)’s 100-day moving average is around 608, near where it closed Tuesday. If the Nasdaq 100 sees further weakness ahead of megacap technology companies’ earnings, the QQQ could rapidly slide to about 580, according to Jay Woods, chief market strategist at Freedom Capital Markets. “I don’t think they’re out of the woods yet,” Woods said of large tech companies. When looking at the broader market, Michael Sheldon of Washington Trust Wealth Management saw reasons to be positive, citing the 70% of S & P 500 stocks above their 200-day moving average last week and the recent performance in the Dow Jones Transportation Average , the S & P 500 Equal Weight index and the Russell 2000 index . Industrial stocks, a key cyclical group that rises and falls with the broader economy, have also done well lately, rising almost 5.5% just since New Years. “The fact that industrials have been doing well … should be viewed as a positive sign for the markets looking ahead over the next few months,” said Sheldon, a portfolio manager. To be sure, skeptics think the retreat may prove more lasting. Neil Wilson of Saxo UK said that the key is to decide whether Trump might be bluffing – as the market decided was true last Spring when the ” TACO trade ” took hold – and whether Europe can call such a bluff without escalating further. “The expectation and hope is that a deal is done. Otherwise, we’re in uncharted waters and we see some much bigger swings,” the investment strategist said. “If he’s really deadly serious about acquiring the island as part of the [U.S], come what may, then things get real ugly from here.” — CNBC’s Alex Harring contributed reporting
