Stocks roared back on Wednesday after President Donald Trump abruptly backed away from his latest tariff threat — easing fears of another self-inflicted market shock.
The rally came after Trump said he would not impose fresh tariffs on Europe, claiming a ‘framework’ deal had been reached over Greenland, days after his surprise threat sparked a brutal global sell-off.
Markets had already been climbing after Trump told delegates at the World Economic Forum that he would not use force to acquire Greenland — walking back on comments that had rattled allies and investors alike.
At just after 3pm in New York, with an hour of trading left, the Dow Jones was up 650 points, or 1.3 percent. The S&P 500 had gained 1.2 percent, while the Nasdaq was up 1.5 percent as battered tech stocks led the rebound.
Trump announced the U-turn on Truth Social after meeting Mark Rutte, writing that the two had agreed on a ‘future deal’ covering Greenland and ‘the entire Arctic Region’.
‘Based upon this understanding, I will not be imposing the tariffs that were scheduled to go into effect on February 1st,’ Trump said.
The reversal helped unwind what traders dubbed the ‘Sell America’ trade — shorthand for investors dumping US stocks, bonds and the dollar on fears that Trump’s tariff threats would hurt growth, stoke inflation and isolate the US from allies.
On Tuesday, that trade had sent stocks tumbling.
President Donald Trump has abruptly backed away from his latest tariff threat
The Nasdaq was up around 1.5 percent as battered tech stocks led the rebound
Trump announced the U-turn on Truth Social after meeting Mark Rutte (L)
Tech giants led the comeback, with investors piling back into Nvidia and AMD after days of defensive positioning.
Bank stocks also climbed after the president told the Davos audience he would press Congress to enact a proposed 10 percent cap on credit card rates — an outcome far from certain, given the lukewarm response on Capitol Hill. Citigroup and Capital One each gained about 1 percent.
‘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 relief rally follows a volatile week in which Trump’s Greenland tariff threat blindsided markets after a holiday shutdown, sparking sharp losses in US and European stocks and renewing fears of a wider trade war.
