In the early morning of January 21st Beijing time, the three major U.S. stock indices closed sharply lower, with risk aversion spreading across the market. The Dow Jones Industrial Average plummeted 870.74 points, or 1.76%, to 48,488.59; the S&P 500 Index fell 2.06% to 6,796.86; the Nasdaq Composite Index extended its decline to 2.39%, closing at 22,954.32, with tech stocks being the main drag.

NVIDIA dropped 4.38%, Tesla fell 4.17%, Apple declined 3.46%, Broadcom slumped 5.43%, and Oracle lost 5.85%, mainly affected by market concerns over escalating trade frictions and the AI bubble. Only SanDisk bucked the trend, surging 9.55% after Citigroup raised its target price.

The decline was driven by Trump’s tariff threats against eight European countries, coupled with rising geopolitical risks, prompting capital to flee risk assets. A Bank of America fund manager survey showed that global investors’ cash holdings dropped to a record low of 3.2%, and downside protection was at its lowest level since 2018, significantly increasing market vulnerability. Going forward, attention should be paid to corporate earnings reports and geopolitical developments to determine if U.S. stocks have entered a correction cycle.