US stocks experienced a significant rebound on January 21, 2026, following President Trump's announcement regarding a framework deal related to Greenland that averted threatened tariffs against European nations. The Dow Jones Industrial Average surged approximately 1.2%, equivalent to over 600 points, closing at 49,077.23. The tech-heavy Nasdaq Composite and the S&P 500 also saw notable gains of about 1.2%, contributing to a positive shift after a difficult trading session on Tuesday.
This bullish sentiment was amplified by a speech from President Trump at the World Economic Forum in Davos, Switzerland, in which he called for immediate negotiations regarding Greenland without using force. The news was well-received in the markets, prompting stocks to surge from previously subdued levels.
The day’s rally was primarily driven by significant gains in the Energy, Materials, and Technology sectors. Megacap stocks like Nvidia, Tesla, Apple, and Alphabet all appreciated, reflecting positive investor sentiment towards tech shares. Additionally, stocks in the defense sector rose following Trump's remarks about boosting military equipment production, highlighting a forthcoming $839 billion spending bill that includes substantial allocations for missile defense projects.
Amidst the market's upswing, quarterly earnings reports revealed mixed results. Netflix saw a decline after failing to impress investors with its latest quarterly results, despite beating earnings expectations. On the other hand, companies like Johnson & Johnson and Charles Schwab received positive feedback as financial institutions benefited from increased trading activity amidst high levels of investor interest.
As of midday trading, the markets were showing signs of resilience, recovering from a turbulent previous day where over 70% of US issues had declined. Currently, 59.6% of stocks are advancing, indicating a shift back to bullish sentiment among investors. The Russell 2000 index maintained its leadership in gaining momentum, reflecting the strength of small-cap stocks, while larger indices like the Nasdaq and S&P 500 also displayed steady progress.
Market reactions to geopolitical developments are a vital factor influencing current investor sentiments. The swift reversal of tariffs indicates a potential thawing of tensions between the US and Europe, but wary traders remain cautious as they reflect on potential long-term implications. Future trading activity will hinge on upcoming earnings reports and the evolving geopolitical landscape.