NEW YORK (AP) — Stocks slumped in afternoon trading on Wall Street Tuesday after President Donald Trump threatened to hit eight NATO members with new tariffs as tensions escalate over his attempts to assert American control over Greenland.

The S&P 500 fell 2%, pulling back further from the record it set early last week. It was the first time U.S. markets could react to the escalation from Trump, as they were closed on Monday for Martin Luther King Jr. Day.

The Dow Jones Industrial Average fell 877 points, or 1.8%, as of 2:46 p.m. Eastern. The Nasdaq composite slumped 2.3%.

The losses were widespread and led by technology stocks, many of which already have more influence over the direction of the market because of outsized values. Retailers, banks and industrial companies also fell sharply.

Nvidia, one of the most valuable companies in the world, plunged 3.6%. Amazon fell 3.7%, JPMorgan Chase fell 2.9%, and Caterpillar lost 3%.

Companies that focus on consumer staples held up better than most of the market. Colgate-Palmolive rose 1.5% and Campbell’s rose 1.7%.

The price of U.S. crude oil rose 1.5% to $60.34 per barrel. The price of Brent crude, the international standard, rose 1.3% to $64.76.

European markets and markets in Asia fell.

Trump said Saturday that he would charge a 10% import tax starting in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland. The annual combined imports from European Union nations are greater than those from the top two biggest individual importers into the U.S., Mexico and China.

Gold prices surged 3.7% and silver prices soared 6.9%. Both reached for records. Such assets are often considered safe havens in times of geopolitical turmoil.

The trade tensions apparently short-circuited a recent rally in bitcoin. The cryptocurrency rose above $96,000 late last week but has dropped back to around $89,300.

Treasury yields were mixed in the bond market. The yield on the 10-year Treasury rose to 4.29% from 4.23% late Friday. The yield on the two-year Treasury slipped to 3.59% from 3.60% late Friday.

Trump linked his aggressive stance on Greenland to last year’s decision not to award him the Nobel Peace Prize, telling Norway’s prime minister that he no longer felt “an obligation to think purely of Peace,” in a text message released Monday.

Trump’s message to Jonas Gahr Støre appeared to ratchet up a standoff between Washington and its closest allies over his threats to take over Greenland, a self-governing territory of NATO member Denmark.

Trump’s threats have sparked outrage and a flurry of diplomatic activity across Europe, as leaders consider possible countermeasures, including retaliatory tariffs and the first-ever use of the European Union’s anti-coercion instrument.

The trade and political conflict with Europe is heating up just as world leaders meet at the World Economic Forum annual meeting in Davos, Switzerland this week. Wedbush Securities analyst Dan Ives said the new tariff threat “is clearly an overhang on the conference,” but that it would likely simmer over time.

“Our view is just like over the last year the bark will be worse than the bite on this issue and tariff threats as negotiations take place and tensions ultimately calm down between Trump and EU leaders,” Ives wrote in a note to clients.

Tariffs have been looming over the U.S. and global economies since 2024. Trump’s tariff policy has been confusing and uncertain, involving the threat or implementation of tariffs and then often followed by delays or cancellations. Existing tariffs have added more pressure to already high prices on goods and the threat of more to come makes it difficult for businesses to plan ahead.

The threat of tariffs reigniting already high inflation could further complicate the Federal Reserve’s job. The central bank cut its benchmark interest rate three times late in 2025 to help bolster the economy as the job market weakened. But, it has taken a more cautious view because of the risk of rising inflation, which remains above the Fed’s target of 2%.

Lower interest rates on loans can help bolster economic activity, but they could also fuel inflation, which could counter any benefit from lower interest rates.

The Fed, and Wall Street, will get another update on inflation on Thursday, when the government releases the personal consumption expenditures price index, or PCE. It is the Fed’s preferred measure for inflation.

The Fed will meet next week for its policy meeting on interest rates and Wall Street is betting that the central bank will hold its benchmark interest rate steady.

Wall Street is also in the midst of the latest round of corporate earnings, which could help provide more insight into how companies are handling uncertainty from tariffs, geopolitics and cautious consumers.

Industrial and consumer conglomerate 3M slumped 6.9% after reporting mixed results for its most recent quarter. United Airlines and Netflix will report their results after the market closes on Tuesday. Companies from a wide range of industries will report their results this week, including Johnson & Johnson, Halliburton and Intel.

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AP Business Writers By Yuri Kageyama and Matt Ott contributed to this report.

Damian J. Troise, The Associated Press