Wall Street Soars Following Trump's Withdrawal of Greenland Tariffs, Risk Assets Catch Their Breath

On January 21 (local time), U.S. stock markets rebounded, recovering more than half of the prior day’s steep losses. The Dow Jones Industrial Average rose 1.2% to 49,077.23, the S&P 500 climbed nearly 1.2% to 6,875.62, and the Nasdaq gained 1.2% to close at 23,224.83. The turnaround followed President Trump’s initial threat of Greenland-linked tariffs, which had driven roughly 2% declines; the subsequent withdrawal of those tariffs and announcement of a “Greenland Framework Agreement” revived investor sentiment.

What moved markets wasn’t economic data or Federal Reserve action, but the easing of policy risk. After the president shelved plans for additional tariffs targeting European allies, U.S. Treasury yields drifted lower and the VIX volatility index calmed. As risk appetite returned, safe-haven assets fell—gold and silver each dropped about 1%—and the dollar, which had weakened the day before, staged a partial recovery.

Corporate earnings delivered mixed results. United Airlines jumped over 2% on better-than-expected quarterly results and upbeat guidance, while Netflix, weighed down by concerns over slowing subscriber growth, slipped about 2%. Kraft Heinz—rumored to be selling a stake to Berkshire Hathaway—tumbled more than 5%. Even so, at the index level, relief prevailed that the “Greenland shock” would not escalate into a full-blown trade war.

The risk-on mood spread globally. On news of Wall Street’s rebound, major Asian indices rose across the board, and South Korea’s Kospi briefly topped the 5,000 mark early in the session. Although short-term tariff risk has eased, markets’ rapid swings on a single political comment underscore the ongoing need for volatility management and diversified portfolios as core defensive strategies.