US stocks rebound after Trump's WEF speech: S&P 500 climbs 0.4%, Dow up 140 pts

• Trump's explicit statement ruling out military force for Greenland reversed Tuesday's market rout, which marked the worst daily performance for major indices since October 10 and pushed S&P 500 and Nasdaq into negative territory for 2026.
• The 10-year Treasury yield retreated after briefly topping 4.3% on Tuesday, as demand for US government bonds returned and the dollar pared losses against major currencies.
• Trade tensions remain unresolved despite market stabilization, with European leaders threatening retaliation through the EU's Anti-Coercion Instrument and JPMorgan warning that 'America First' policies are driving persistent diversification away from dollar assets.

Market Summary: US Stocks Rebound Following Trump's WEF Speech

Key Market Movements:

US equity markets rebounded Wednesday after President Trump's speech at the World Economic Forum in Davos, Switzerland. The Dow Jones rose 141 points (+0.3%), the S&P 500 gained 0.4%, and the Nasdaq Composite advanced 0.3%. This recovery followed Tuesday's sharp sell-off—the worst single-day performance since October 10, which pushed both the S&P 500 and Nasdaq into negative territory for 2026.

Catalyst for Recovery:

Markets stabilized after Trump explicitly ruled out using military force to acquire Greenland, stating "I won't use force." This marked the first time he definitively dismissed military action regarding the Danish-controlled territory, easing geopolitical tensions that had triggered a "sell America" trade the previous day.

Fixed Income and Currency Markets:

US Treasury prices rose and yields declined from Tuesday's spike, with the 10-year Treasury yield easing after briefly topping 4.3%. The US dollar index also stabilized, pausing the rapid diversification away from dollar-based assets.

Ongoing Concerns:

Despite the reassurance, uncertainty persists. Trump continues seeking negotiations for Greenland's acquisition, maintaining diplomatic tensions. European leaders have responded forcefully, with European Commission President Ursula von der Leyen calling Trump's tariff proposals a "mistake" and promising an "unflinching, united and proportional" response. French President Emmanuel Macron suggested the EU could deploy its Anti-Coercion Instrument, potentially restricting US business access to Europe's single market.

JPMorgan's Joyce Chang noted that "America First is quietly driving diversification away from dollar assets," particularly among government entities, signaling potential longer-term portfolio shifts despite Wednesday's relief rally.