Dow Soars 500 Points After Trump Abandons Scheduled European Tariffs In Surprise Greenland Deal

Wall Street breathed a collective sigh of relief on Wednesday after President Trump pivoted sharply on his Greenland ambitions, scrapping threatened tariffs against Europe in a move that sent stock indices soaring. The sudden reversal—announced via Truth Social late in the afternoon trading session—erased most of Tuesday's brutal losses and provided investors with the reassurance they desperately needed after days of geopolitical turbulence threatened to spiral into a full-blown trade war.

The Dow Jones Industrial Average surged 588 points, or roughly 1.2 per cent, closing at 49,077. The S&P 500 climbed 1.16 per cent to 6,875, reclaiming positive territory for the year, whilst the tech-heavy Nasdaq Composite jumped 1.2 per cent to notch its best day since December. For many market participants, the relief was palpable—a reprieve from the worst daily decline since October that had sent investors fleeing towards safer assets.

Trump's announcement came via Truth Social just after midday trading, following a more measured tone in his keynote address at the World Economic Forum in Davos earlier that morning. '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. 'Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st.'

The statement marked a dramatic reversal from threats made just days earlier, when Trump had dangled the prospect of punitive 10 per cent tariffs on European nations who refused to endorse an American purchase of Greenland—with further escalations to follow. The warning had rattled markets and reignited what traders grimly called the 'Sell America' trade, spurring a rush into safe-haven assets as the spectre of a transatlantic trade conflict loomed large.

The Greenland Deal Framework: What Markets Actually Care About

Investors largely shrugged off the details of what Trump actually negotiated with NATO Secretary General Mark Rutte, instead focusing on the singular fact that tariffs were off the table. The market's reaction underscored a broader truth: in times of geopolitical uncertainty, clarity—even imperfect clarity—trades at a premium.

Trump had softened his rhetoric during his Davos speech, stating that whilst he remained committed to acquiring Greenland, he would pursue the objective through 'immediate negotiations' rather than military force. 'We probably won't get anything unless I decide to use excessive strength and force, where we would be, frankly, unstoppable, but I won't do that,' he told the forum. The pivot, though still bullish on American territorial ambitions, signalled a retreat from the most inflammatory rhetoric that had spooked markets.

Energy stocks led the recovery, climbing in tandem with Materials and Tech. Megacap technology companies—Nvidia, Tesla, Apple, and Alphabet—all gained ground, suggesting that investors had regained appetite for growth-oriented assets that had suffered during Tuesday's flight to safety.

The session also highlighted how dramatically the bond market had reacted to Tuesday's turmoil. Treasury yields had climbed sharply on Wednesday morning, with the 10-year yield rising 6 basis points to 4.29 per cent and the 30-year yield jumping 8 basis points to 4.92 per cent—the highest levels in four months. The sharp move reflected genuine anxiety about the trajectory of trade policy and America's willingness to pursue nationalist economic strategies that could destabilise the post-war international order.

Corporate Earnings Paint A More Complex Picture

Whilst stock indices celebrated Trump's retreat from tariff brinkmanship, corporate earnings reports offered a more sobering narrative about the underlying health of American business. Netflix tumbled more than 5 per cent in premarket trading despite beating earnings estimates, as investors fretted over the streaming giant's plans to accelerate spending on content and pause share buybacks. The company reported revenue of £9.5 billion against Wall Street estimates of £9.4 billion, with earnings per share of 44 pence versus forecasts of 43 pence.

Perhaps more troubling was the reaction to corporate earnings across the broader market. Data compiled by Bloomberg revealed that S&P 500 companies' earnings beats were being met by the worst share-price reactions on record—a phenomenon that suggested investor sentiment had fundamentally shifted. Companies delivering better-than-expected results were actually being punished by markets, a reversal of the traditional positive correlation that typically characterises earnings season.

Intel shares, by contrast, soared 10.5 per cent to their highest level since 2022 ahead of Thursday's earnings report, buoyed by analyst upgrades from HSBC and Seaport Global Holdings. Moderna surged 11 per cent following positive five-year cancer vaccine data, whilst Merck climbed 1.8 per cent on news that their personalised melanoma treatment reduced the risk of recurrence or death by 49 per cent compared to Keytruda alone.

Yet beneath these individual stock movements lay deeper questions about monetary policy and regulatory overreach. The Supreme Court heard arguments on Wednesday regarding Trump's attempt to remove Federal Reserve Governor Lisa Cook, and the justices appeared distinctly sceptical. Even Trump appointees Brett Kavanaugh and Amy Coney Barrett signalled concern that removing Cook could compromise the Fed's institutional independence and rattle markets further.

Markets ultimately closed higher on Wednesday, but the underlying volatility served as a reminder of how fragile investor confidence remains in an era of unpredictable policy announcements and geopolitical gamesmanship.