US midday market brief: Dow climbs over 300 points after Trump eases Greenland concerns

• Trump's explicit comments ('I won't use force') closed the door on military action speculation, stabilizing the dollar and pushing Treasury yields lower after the 10-year yield had spiked above 4.29%.
• Financials and technology sectors led the recovery, with Nvidia up 1.10%, though tariff uncertainty persists as Trump still threatens 10% to 25% tariffs on eight European nations.
• The VIX volatility gauge began normalizing from elevated levels, but traders remain cautious heading into earnings season and upcoming Fed policy signals.

Market Summary

Market Performance:

U.S. equities surged midday Wednesday, with the Dow Jones climbing 337.89 points (0.70%) to 48,826.48, the S&P 500 rising 0.76% to 6,848.57, and the Nasdaq gaining 0.73% to 23,122.60. This sharp rebound reversed four consecutive brutal trading sessions.

Catalyst:

President Donald Trump's remarks at the World Economic Forum in Davos sparked the rally. Trump explicitly stated he would not use military force to acquire Greenland, saying "I don't have to use force. I don't want to use force. I won't use force." This clarification eased acute geopolitical concerns that had roiled markets.

Previous Selloff:

Tuesday saw severe losses with the Dow dropping 870.74 points (1.76%), the S&P 500 falling 2.06%, and the Nasdaq declining 2.39%—the worst sessions since October. The 10-year Treasury yield had spiked above 4.29% amid a flight from dollar-based assets.

Sector Performance:

Financials and technology led gains as traders returned to cyclicals. Nvidia climbed 1.10%, while Netflix fell over 2% on disappointing margin guidance. The VIX volatility index normalized but remained elevated versus early January levels.

Remaining Risks:

Despite the relief rally, uncertainty persists. Trump threatened 10% to 25% tariffs on eight European nations if Greenland negotiations falter, maintaining trade war concerns. Market participants remain cautious with earnings season accelerating and Fed policy still in focus.

Outlook:

While the immediate military risk has been eliminated, the rally appeared measured as investors await next week's economic data and central bank signals that could reshape market sentiment.