Wall Street staged a sharp midday rebound on Wednesday as President Donald Trump told the World Economic Forum he would not use military force to acquire Greenland.
The remarks eased the most acute worry roiling markets since his tariff threats sparked the week’s heaviest selloff on Tuesday.
The Dow Jones Industrial Average surged 337.89 points, or 0.70%, to 48,826.48, while the S&P 500 climbed 0.76% to 6,848.57 and the Nasdaq rose 0.73% to 23,122.60.
Trump tells Davos, ‘I won’t use force’
Speaking in Davos on Wednesday morning, Trump addressed the speculation that had unnerved investors and policymakers.
People thought I would use force. I don’t have to use force. I don’t want to use force. I won’t use force.
The clarification came as a relief, as markets had been pricing in a scenario where escalating rhetoric could tip into military posturing.
The move came after four brutal trading days.
On Tuesday alone, the Dow shed 870.74 points, or 1.76%, while the S&P 500 dipped 2.06% and the Nasdaq fell 2.39%, the worst sessions since October.
The 10-year Treasury yield had spiked above 4.29%, and the US dollar began to roll over as investors started a “flight from dollar-based assets.”
Wednesday’s remark reversed much of that damage. Yields moved lower, the dollar stabilized, and traders rushed back into equity positions.
The investors were particularly relieved that Donald Trump was very specific in his remarks.
Rather than leave open the possibility of unilateral military action, the US President closed that door entirely.
“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 said.
Broader market gains remain cautious
The sectoral response revealed where confidence had cracked.
Financials and technology were the session’s main gainers, as the relief from geopolitical risk pushed traders back into cyclicals.
Intel surged over 6% after analysts raised price targets ahead of the chipmaker’s earnings.
Nvidia climbed 1.10%. Netflix, however, fell more than 2% on margin guidance disappointment.
The VIX volatility gauge, which had spiked sharply during Tuesday’s selloff, began to normalize, though it remained elevated relative to early January levels.
Traders noted that while the immediate military risk had been removed, tariff uncertainty persisted.
Trump still threatened 10% to 25% tariffs on eight European nations if negotiations over Greenland falter, leaving a layer of trade war risk in place.
The rally was real, but measured.
With earnings season ramping and Fed policy still in focus, market participants appear willing to accept whatever relief is offered.
Next week’s economic data and central bank signals may reset the narrative.
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