U.S. Stock Market Reacts to Trump's Greenland Deal Announcement

On January 21, 2026, U.S. equities experienced a significant rebound following President Donald Trump’s announcement regarding the suspension of new tariffs on European goods, which he attributed to a newly established framework for a deal concerning Greenland. This unexpected turn of events came during Trump’s speech at the World Economic Forum (WEF) in Davos, Switzerland, where he also assured that he would not resort to military action to acquire the territory.

The Dow Jones Industrial Average surged by 588.64 points, or 1.21%, closing at 49,007.23. Similarly, the S&P 500 and Nasdaq Composite saw gains of 1.16% and 1.18%, respectively, ending the day at 6,875.62 and 23,224.82. Despite this positive momentum, all three major indexes remained in the red for the week, with the Dow projected to decline by 0.6%, the S&P 500 by 0.9%, and the Nasdaq by 1.2%.

President Trump took to Truth Social to express his optimism about the negotiations, stating, “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.” He confirmed that due to this understanding, the previously scheduled tariffs set to take effect on February 1 would not be imposed.

The announcement led to a reversal of the “sell America” trade that had negatively impacted the markets just a day prior. Investors were encouraged to return to growth stocks, particularly in the technology sector, with companies like Nvidia and AMD leading the charge. Additionally, bank stocks saw a boost after Trump indicated he would seek Congressional approval for a proposed cap on credit card interest rates at 10%.

Jed Ellerbroek, a portfolio manager at Argent Capital Management, commented on the unpredictable nature of Trump’s policies, noting that the market’s reaction to his announcements has become less certain. “The stock market no longer assumes that his pronouncements are going to be enforced,” he remarked, highlighting the inconsistent nature of Trump’s approach to geopolitical tensions.

Tensions had escalated prior to the announcement, as European lawmakers had suspended the European Union’s trade deal with the U.S. amidst tariff threats related to Greenland. Just days earlier, Trump had announced that goods from eight NATO member countries would face a 10% tariff starting February 1, which would increase to 25% on June 1 if a deal was not reached.

The previous trading day had seen sharp losses across the board, with all three major indexes experiencing their worst performances since October 10, 2025. This sell-off was compounded by a spike in U.S. Treasury yields and a decline in the U.S. dollar.

Despite the market’s recovery on Wednesday, Treasury Secretary Scott Bessent reassured reporters in Davos that the Trump administration was “not concerned” about the sharp decline observed in the prior session.

Meanwhile, in Washington, discussions continued regarding Trump’s authority over the Federal Reserve. Supreme Court justices expressed skepticism about whether Trump could dismiss Federal Reserve governor Lisa Cook without judicial review, emphasizing the importance of maintaining the independence of the Federal Reserve.

As the U.S. stock market continues to navigate the complexities of international trade and domestic policy, investors remain watchful of how Trump’s unpredictable maneuvers will play out in the coming weeks. The implications of these developments on the broader economic landscape will certainly be a topic of keen interest in the months ahead.