By the market’s close on January 16, even a late, start-of-2026 investment in the S&P 500 appeared like a fruitful trade considering the benchmark index was close to a new all-time high (ATH) set in the new year. By press time on January 21, the situation had rapidly changed, and such a bet on the stock market would have turned into a loser.

Specifically, the S&P 500 entered the new year at 6,858.47 and advanced 1.73% to 6,977.27 by January 12, thus turning a $1,000 investment into $1,017. The moderate correction to 6,940.01 by January 16 would have still helped investors keep $12 in profits.

Furthermore, had a similar bullish trajectory persisted, a $1,000 investment made at the start of 2026 would have turned into approximately $1,324 by the end of the year as the benchmark index could have reasonably recorded a 32.41% rally.

The January 20 trading day, however, radically altered the situation as more than $1.2 trillion was wiped from the index within a single session. The move ensured the S&P 500 is 0.90% down in the year-to-date (YTD) chart, and a $1,000 investment made at the start of 2026 would have turned into $991: a $9 loss.

What caused the S&P 500 bloodbath on January 20, 2026

Such an outcome occurred due to persistent market turmoil that arose from President Donald Trump’s renewed drive to annex Greenland, and the E.U.’s vocal opposition to the initiative.

Along with the fears of where the conflict may lead and how much it could escalate, it already led to the U.S. announcing new tariffs on eight European countries – set at 10% from February 1, and pending an increase to 25% on June 1 – and the Europeans threatening to use the ‘trade bazooka’ in retaliation.

By press time on January 21, the related bloodbaths saw massive drops in the stock and cryptocurrency markets, a U.S. Dollar Index (DXY) fall below its 200-day moving average (MA), a 10-year bond yield increase amidst the fears the E.U. would leverage $8 trillion of American debt it holds in the conflict, and a steady rise in the price of gold and silver.

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