U.S. stocks rallied on Wednesday after President Donald Trump abandoned plans for new tariffs on Europe, saying a framework agreement had been reached regarding Greenland.
Markets were already trading higher earlier in the session after Trump told attendees at the World Economic Forum in Davos, Switzerland, that he would not use military force to acquire Greenland.
The Dow Jones Industrial Average jumped 588.64 points, or 1.21%, to close at 49,007.23. The S&P 500 rose 1.16% to finish at 6,875.62, while the Nasdaq Composite gained 1.18%, ending the day at 23,224.82. Despite Wednesday’s rebound, all three major indexes remain lower for the week, with the Dow down 0.6%, the S&P 500 off 0.9%, and the Nasdaq lower by 1.2% week to date.
In a post on Truth Social, Trump said he had a “very productive meeting” with NATO Secretary General Mark Rutte, resulting in a framework for a future deal covering Greenland and the broader Arctic region. Based on that understanding, Trump said the tariffs scheduled to take effect on Feb. 1 would no longer be imposed. He later told CNBC that the parties had reached “a concept of a deal.”
Following the tariff reversal, the so-called “sell America” trade that rattled markets on Tuesday quickly unwound. U.S. Treasury prices moved higher, pushing yields lower, while the U.S. dollar strengthened against major currencies.
Technology stocks led the rebound, with investors rotating back into growth names such as Nvidia and AMD after pulling back earlier in the week. Bank shares also advanced after Trump said in his Davos remarks that he would ask Congress to consider a 10% cap on credit card interest rates, though the proposal faces resistance from lawmakers. Citigroup and Capital One each gained about 1%.
Tensions had remained elevated earlier in the day despite Trump’s pledge to avoid military action, as tariff threats continued to cloud U.S.–Europe relations. European lawmakers had suspended a U.S.–EU trade agreement reached in July, citing ongoing disputes linked to Greenland. Over the weekend, Trump had said goods from eight NATO members would face 10% tariffs starting Feb. 1, rising to 25% on June 1 if a Greenland deal was not reached.
Stocks had tumbled in the previous session after Trump escalated tariff threats and declined to rule out the use of force, sending all three major indexes to their worst daily losses since Oct. 10 and pushing the S&P 500 and Nasdaq into negative territory for 2026.
Tuesday’s sell-off was accompanied by a surge in Treasury yields and a weaker U.S. dollar. Treasury Secretary Scott Bessent said Wednesday in Davos that the administration was “not concerned” about the market reaction.
Meanwhile, in Washington, Supreme Court justices signaled skepticism over whether Trump has the authority to remove Federal Reserve Governor Lisa Cook. During oral arguments, Justice Brett Kavanaugh warned that allowing such action without judicial review could undermine the independence of the Federal Reserve.
