The S&P 500 posted its worst single-day performance in three months, shedding 2.1% as market sentiment soured following President Donald Trump’s critical remarks toward key U.S. allies. Major defense and aerospace firms led the decline.
- S&P 500 dropped 2.1% on January 20, 2026, its worst day in three months
- Lockheed Martin (LMT) fell 6.3%, losing $14 billion in market cap
- Boeing (BA) declined 5.7%, reflecting growing concern over international contracts
- Raytheon Technologies (RTX) and Northrop Grumman (NOC) each dropped over 4.8%
- Russell 2000 fell 2.9%, signaling broad-based risk aversion
- Treasury yields rose on increased demand for safe-haven assets
The S&P 500 dropped 2.1% on Tuesday, marking its steepest one-day fall since October 2025, as investor confidence wavered over shifting international relations. The downturn followed a series of public statements by President Trump criticizing longstanding NATO partners and European trade policies, sparking concerns about potential policy reversals affecting global supply chains and defense contracts. Among the hardest-hit were defense sector stocks. Lockheed Martin (LMT) fell 6.3%, erasing nearly $14 billion in market value, while Boeing (BA) plunged 5.7% amid renewed scrutiny over its international partnerships and military aircraft delivery timelines. Raytheon Technologies (RTX) declined 5.1%, and Northrop Grumman (NOC) dropped 4.8%. These losses were driven by fears that deteriorating alliances could disrupt multi-billion-dollar defense procurement programs and alter export licensing frameworks. The broader market reflected the sentiment: the Russell 2000 small-cap index tumbled 2.9%, and Treasury yields spiked as risk-off flows intensified. Investors began rotating out of cyclical sectors, with tech stocks like Apple (AAPL) and Microsoft (MSFT) seeing modest declines despite solid earnings reports, underscoring a flight to perceived safety in fixed-income instruments and defensive equities. The sell-off underscored how geopolitical rhetoric can swiftly translate into financial market volatility, particularly in capital-intensive industries reliant on long-term government contracts and cross-border collaboration.