Stocks surge on Trump's claim of deal on Greenland
Speculative spirits were restored on Wall Street after a one-day selloff, fuelled by hopes for a solution in Donald Trump’s ambitions for Greenland that would avoid tariffs. Stocks spiked and Treasuries gained after the president said he reached a reached the framework of a deal with NATO .
Following a cross-asset slide dubbed by some as a revival of the “Sell America” trade, almost 400 shares in the S&P 500 rose — with the measure up 1.4 per cent. Small caps beat the United States equity benchmark for a 13th straight day while energy shares hovered near a record. Equity benchmarks earlier pared gains as concern over a renewed trade war with Europe entered the fray.
President Trump said he would refrain from imposing tariffs on goods from European nations that oppose his effort to take possession of Greenland, adding he reached a “framework of a future deal” regarding the island.
“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,” Trump posted Wednesday on social media. “Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st.
The S&P 500 rose to about 6,885, wiping out its drop for 2026. The yield on 10-year Treasuries slid four basis points to 4.25 per cent. A US$13 billion auction of 20-year bonds drew good demand. The dollar wavered.
“The markets breathed a sigh of relief during Trump’s speech marathon, where the United States President ruled out the use of military to acquire Greenland,” said Fawad Razaqzada at Forex.com. “But does this mean it is risk back on, and markets will kick on from here after the recent falls? Well, time will tell.”
Trump has ruled out the use of force to acquire this island, but his push for immediate negotiations over ownership will likely maintain the pressure around this sensitive topic, according to James McCann at Edward Jones.
“We will be watching carefully for further signals from the president and European counterparts over coming days, which could provide more clarity on how this dispute might be resolved in a way that secures U.S. defence concerns and protects local sovereignty,” McCann said.
JPMorgan Asset Management’s Bob Michele said the recent selloff in markets was a message to the Trump administration to take action to restore calm as officials did after Liberation Day tariffs rattled investors last year.
“Things are a bit chaotic and the markets do feel a bit panicked,” he said. “The market had a fit in April and then they backed off of a lot of things and then calm ensued. We need to hear some of the same kinds of things.”
Tuesday served as a reminder that investors remain emotional about geopolitical and tariff headlines, and that record allocations to equities leaves little margin for error, according to Mark Hackett at Nationwide.
“Following the strong run to record highs, it is not unusual or unhealthy to see a period of consolidation,” he said. “As skepticism arises, investors are more reactive, and companies are unable to buy back shares due to earnings blackout periods. The weakness has been temporary, however, with the rally continuing shortly after earnings season.”
The tariff threats surrounding Greenland show that the stock market, while resilient, is still headline-sensitive, and there will be plenty of headlines in the coming weeks, whether they are from Washington, earnings, economic data or the Fed, noted David Laut at Kerux Financial.
“We remind investors that tariff headlines can cause short-term volatility, but that applies in both directions,” Laut added. “The tariff threats can easily be unwound and reversed, sparking upside market volatility.”
Laut also said that the tariff-driven stock market declines present opportunities for investors who are looking for an attractive entry point to put new money to work. He bets value stocks, in sectors like financials, materials and energy, are the better buys right now given elevated valuations in tech stocks.
Provided Europe does not activate its anti-coercion tool or a large-scale divestment of U.S. assets, a correction on the scale of the post-Liberation Day pullback appears unlikely, according to Seema Shah at Principal Asset Management.
“However, this episode may accelerate an emerging structural shift: global investors have shown greater appetite to diversify away from U.S. concentration risks, especially in AI leadership, and renewed geopolitical unpredictability strengthens this incentive,” she said. “Recent dollar softness is consistent with this gradual global portfolio rebalancing.”
Trump has expressed confidence that the European Union would continue to invest in the U.S. even if he imposed new tariffs related to his quest to take control of Greenland, a proposal that has angered leaders on the continent.
For all the turmoil rattling markets, the foundation for more gains looks solid, several Wall Street strategists say. Their reasoning generally rests on the idea that risk assets have long looked past prior bouts of geopolitical unrest, except when the disorder causes oil prices to spike.
“Many investors worry it could rattle equity markets. We are less convinced,” Alastair Pinder at HSBC Holdings PLC, wrote in a Jan. 20 note. The 36 major geopolitical events since 1940 saw U.S. stocks rise 60 per cent of the time in the three months that followed, he said.
“These episodes create chaos in the short term, but they tend to cool over time,” said Kenny Polcari at SlateStone Wealth. “None of this changes the trajectory of the U.S. economy or the expectations for a strong 2026. Volatility is your friend, and weakness should be used to build positions in quality leaders that are getting unnecessarily whacked by the headlines.”
Polcari also cites the fact that we’re in the middle of what is expected to be a strong earnings season.
While another reason to be bullish comes indeed from prospects of strong corporate profits, unimpressed investors are delivering the worst share-price reactions on record as the outlook for 2026 turns murky.
Data compiled by Bloomberg Intelligence show about 81 per cent of S&P 500 firms have beaten fourth-quarter profit expectations so far. However, their shares have trailed the benchmark by an average of 1.1 percentage points — the worst relative performance across data going back to 2017.