U.S. equities leaped after Wednesday after President Donald Trump called off new Europe tariffs, saying a deal framework has been reached over Greenland.
Stocks were already rising after the president earlier said in a speech at the World Economic Forum in Davos, Switzerland, that he would not use force to acquire Greenland.
The Dow Jones Industrial Average surged 588.64 points, or 1.21%, to end at 49,007.23. The S&P 500 gained 1.16% and closed at 6,875.62, while the Nasdaq Composite advanced 1.18% to settle at 23,224.82. Even with the day's gains, the three leading indexes are still in the red for the week. The Dow is pacing for a 0.6% decline. The S&P 500 is heading for a 0.9% drop, and the Nasdaq is off 1.2% week to date.
"Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region," wrote Trump on Truth Social. "Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st."
Trump told CNBC shortly after that announcement that "we have a concept of a deal" with Greenland.
Following Trump's tariff halt, the so-called "sell America" trade, which hit the financial markets Tuesday, reversed on Wednesday. The 10-year Treasury price turned higher and its yield turned lower, and the U.S. dollar index gained with other currencies.
Tech stocks like Nvidia and AMD led the market comeback as investors piled back into their favorite growth stocks after hunkering down earlier in the week.
Bank stocks also rose after the president said in his Davos speech that he would be asking Congress to implement his proposed credit card cap of 10%, an uncertain prospect given lack of support among lawmakers. Citigroup and Capital One each rose roughly 1%.
"President Trump is so unpredictable and he changes direction so quickly. The stock market no longer assumes that his pronouncements are going to be enforced," Jed Ellerbroek, portfolio manager at Argent Capital Management, told CNBC. "The battle with Europe over Greenland would have taken the stock market down a lot more than the 2% yesterday if investors actually believed that this was a major geopolitical rift."
Even after Trump said there would be no military action over Greenland tensions were high because of the tariff threat. Earlier Wednesday, European lawmakers suspended the European Union's trade deal with the U.S. that was reached in July in the midst of ongoing tariff tensions over Greenland. Trump had announced over the weekend that eight NATO members' goods will face 10% tariffs starting on Feb. 1 — which will then escalate to 25% on June 1 — until a deal to purchase Greenland is reached.
Stocks posted sharp losses in the prior trading day as Trump escalated his Greenland tariff threats and failed to rule out military use to take the territory controlled by Denmark. All three benchmark indexes logged their worst daily performances since Oct. 10. The sell-off also dragged the S&P 500 and the Nasdaq into negative territory for 2026.
The "sell America" trade Tuesday was accompanied by a spike in U.S. Treasury yields and a decline in the U.S. dollar.
Treasury Secretary Scott Bessent told reporters in Davos on Wednesday that the Trump administration was "not concerned" about the previous session's sell-off.
Back in Washington, Supreme Court justices expressed skepticism about whether Trump has the authority to fire Lisa Cook as a Federal Reserve governor. During oral arguments Wednesday, Justice Brett Kavanaugh told a Trump administration lawyer that arguments the president can fire Cook without judicial review "would weaken, if not shatter, the independence of the Federal Reserve."
