[New York Stock Exchange] Markets Rebound as "Greenland Tariffs" Withdrawn... U.S. Treasury and Dollar Sell-Off Eases

Trump Withdraws Tariffs on Europe at Davos
U.S. Establishes Framework for Future Agreements with NATO on Greenland and the Arctic
Military Options Ruled Out... "Sell America" Trend Subsides as Tensions Ease
Technology and Financial Stocks R

On January 21 (local time), all three major U.S. stock indexes rebounded simultaneously. Investor sentiment recovered quickly as President Donald Trump established a framework for agreements regarding the North Atlantic Treaty Organization (NATO) and the Greenland issue, and withdrew plans to impose the so-called 'Greenland tariffs' on Europe. In addition, by ruling out the possibility of military options concerning Greenland, the 'Sell America' trend-including the sell-off of U.S. Treasury bonds and the dollar that had been triggered the previous day-also subsided.

A trader is working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by AFP Yonhap News

On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 49,077.23, up 588.64 points (1.21%) from the previous trading day. The S&P 500, which centers on large-cap stocks, rose by 78.76 points (1.16%) to finish at 6,875.62, while the tech-heavy Nasdaq increased by 270.502 points (1.18%) to close at 23,224.825.

The main reason for the stock market’s rebound within a day was the easing of tensions between the United States and Europe over the Greenland issue. The decisive factors were the United States forming a basic framework for future agreements with NATO regarding the annexation of Greenland, and the decision to withdraw the plan to impose tariffs on Europe.

President Trump, who is attending the World Economic Forum (WEF) in Davos, Switzerland, announced via his social media platform Truth Social, "I had a very productive meeting with NATO Secretary General Mark Rutte," and "We have established a basic framework for future agreements regarding Greenland and the entire Arctic region." He further explained, "According to this agreement, the tariffs that were scheduled to take effect from February 1 will not be imposed."

Previously, President Trump had warned that he would impose a 10% tariff on imports from eight European countries, including Denmark, which opposes the annexation of Greenland, starting next month, and a 25% tariff from June 1. However, with this agreement, the conflict between the United States and Europe, which had been escalating into a head-to-head confrontation, appears to be finding a way out for now. As a result, market participants noted the reappearance of the so-called 'TACO (Trump Always Chickens Out)' trade, meaning 'Trump always backs down.'

President Trump's official exclusion of the possibility of military action against Greenland in the morning also had a positive effect on the stock market. In a special address, he expressed his intention to immediately pursue negotiations to secure Greenland, but stated, "I do not want to use force, and I will not use force."

Until the previous day, concerns had been growing that the Greenland issue could escalate from a U.S.-Europe conflict into a trade war, resulting in the 'Sell America' phenomenon, with U.S. stocks, Treasury bonds, and the dollar all declining simultaneously. However, as both sides sought diplomatic solutions, the sell-off of long-term Treasury bonds and the dollar also began to subside.

The yield on the 10-year U.S. Treasury bond, which serves as a global benchmark, dropped by 4 basis points (1bp = 0.01 percentage point) from the previous trading day to 4.25%. The yield on the 2-year U.S. Treasury bond, which is sensitive to monetary policy, remained at the previous day's level of 3.59%. The dollar index, which measures the value of the U.S. dollar against the currencies of six major countries, was up 0.15% from the previous day, trading at 98.59.

Jed Ellerbroek, portfolio manager at Argent Capital Management, said in an interview with CNBC, "President Trump is unpredictable and changes policy direction too quickly," adding, "The stock market no longer assumes that his declarations will actually be implemented." He also commented, "If investors truly regarded the conflict with Europe over Greenland as a major geopolitical dispute, the stock market should have fallen much more than 2% yesterday."

Additionally, U.S. Treasury Secretary Scott Bessent mentioned at the Davos Forum that he had spoken with Christian Sewing, CEO of Deutsche Bank, and clarified that the Deutsche Bank report suggesting Europe might sell off U.S. assets such as stocks and Treasury bonds due to the Greenland conflict does not represent the bank’s official position. This also helped to calm the anxiety that had spread through the market and reduced caution among investors.

By sector, technology stocks were strong. Nvidia rose 2.87%, Alphabet, the parent company of Google, gained 1.93%, and Apple increased by 0.39%. AMD surged by 7.71%. Financial stocks also rose, with Citigroup up 0.94% and Capital One up 1.01%. President Trump also stated his intention to request Congress to introduce a cap on credit card interest rates, but there is skepticism about whether this will actually be enacted into law.