US market volatility spikes as trade tensions with Europe weigh on stocks, Treasuries, and the dollar, pushing investors toward safer assets

Stocks, long-dated Treasuries, and the US dollar fell sharply on Tuesday as investors reacted to renewed trade tensions between the United States and Europe, Reuters reports.

Also read: Nigerian Naira Gains Against US Dollar Amid CBN Reforms

The decline reversed earlier gains seen in the week and reflected growing uncertainty in global markets. President Donald Trump’s threat to impose tariffs on European imports triggered a repeat of the “Sell America” trade observed after last year’s April tariff announcement, prompting investors to withdraw from US assets.

Wall Street’s key gauge of market anxiety, the Cboe Volatility Index, rose 1.9 points to an eight-week high of 20.69, while the S&P 500 Index dropped 1.1 per cent to 6,859 points.

“We have certainly seen a meaningful reaction in the risk metrics since Friday; it’s a very significant shift,” said Jim Carroll, senior wealth adviser and portfolio manager at Ballast Rock Private Wealth in Charleston, South Carolina.

He noted, however, that the sell-off did not signal extreme panic.

Analysts said the spike in volatility was partly expected after last week’s monthly equity options expiration. “It’s a standard reaction to geopolitical turmoil: take equity risk off the table, buy gold, buy cash. And that’s kind of what we’re seeing,” said Alex Morris, CEO and CIO of F/m Investments.

In currency markets, the safe-haven US dollar fell 0.6 per cent against a basket of peers to a more than two-week low, even as one-month implied volatility for the euro jumped to 6.03 per cent, according to Reuters.

Also read: Naira Hits Strongest Level of 2025 at ₦1,421.73 Per Dollar

Michael Brown, a market analyst at online broker Pepperstone in London, warned that further volatility could follow if progress toward resolving the tariff threats remains limited.