[New York Stock Exchange] Markets Rebound as "Greenland Tariffs" Withdrawn...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 closed higher. Investor sentiment rebounded rapidly as U.S. President Donald Trump established a framework for agreements regarding NATO and the Greenland issue and withdrew plans to impose the so-called "Greenland tariffs" on Europe. Additionally, by ruling out any military options concerning Greenland, the "Sell America" trend that had triggered a sell-off in U.S. Treasuries and the dollar 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 session. The S&P 500 Index, which tracks large-cap stocks, rose 78.76 points (1.16%) to finish at 6,875.62, while the tech-heavy Nasdaq Index gained 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 plans for tariffs on European goods.

President Trump, who is attending the World Economic Forum (WEF) in Davos, Switzerland, announced on his social media platform Truth Social, "I had a very productive meeting with NATO Secretary General Mark Rutte and established a basic framework for future agreements on Greenland and the entire Arctic region." He added, "Accordingly, we have decided not to impose the tariffs that were scheduled to take effect on February 1."

Previously, President Trump had warned that the United States would impose a 10% tariff on imports from eight European countries, including Denmark, which opposes the annexation of Greenland, starting February 1, and increase the tariff to 25% from June 1. However, with this agreement, the previously escalating conflict between the United States and Europe appears to be finding a way out. As a result, the so-called "TACO (Trump Always Chickens Out)" trade, meaning "Trump always backs down," has resurfaced in the market.

President Trump’s official rejection of the possibility of using military force against Greenland that morning also had a positive impact on the stock market. In a special address, he expressed his intention to immediately begin negotiations to secure Greenland but stated, "I do not want to use force, and I will not use force."

Until the previous day, concerns that the Greenland issue could escalate from a U.S.-Europe conflict into a full-blown trade war had led to a "Sell America" phenomenon, with U.S. stocks, Treasuries, and the dollar all declining simultaneously. However, as both sides sought diplomatic solutions, the sell-off in long-term Treasuries and the dollar has also subsided.

The yield on the 10-year U.S. Treasury, a global bond benchmark, is currently at 4.25%, down 4 basis points (1bp = 0.01 percentage point) from the previous session. The yield on the 2-year U.S. Treasury, which is sensitive to monetary policy, is holding steady at 3.59%. The dollar index, which measures the value of the dollar against six major currencies, is trading at 98.59, up 0.15% from the previous day.

Jed Ellerbrook, 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 announcements will actually be implemented." He continued, "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, speaking at the Davos Forum, mentioned his call with Deutsche Bank CEO Christian Sewing and clarified that a Deutsche Bank report suggesting Europe might sell off U.S. assets such as stocks and Treasuries due to the Greenland dispute does not represent the bank’s official position. This also helped ease the anxiety that had spread through the market and reduced investor caution.

By sector, technology stocks performed strongly. Nvidia rose 2.87%, Alphabet, Google’s parent company, gained 1.93%, and Apple was up 0.39%. AMD surged 7.71%. Financial stocks also climbed, with Citigroup up 0.94% and Capital One rising 1.01%. President Trump announced plans to request Congress to introduce a cap on credit card interest rates, but there is skepticism about whether this will actually result in legislation.