Will the Stock Market Rebound Gain Momentum as Trump Softens Greenland Rhetoric

U.S. equities staged a meaningful recovery today, signaling that investor anxiety over escalating geopolitical tensions may be cooling. The benchmark S&P 500 advanced 57 basis points, while the Dow Jones Industrial Average climbed 63 basis points and the Nasdaq 100 rose 45 basis points. March E-mini contracts for both the S&P 500 and Nasdaq futures pointed to continued momentum, gaining 62 and 60 basis points respectively. This rebound follows a turbulent session earlier in the week when risk appetite sharply deteriorated amid uncertainty surrounding the administration’s policy stance toward Greenland.

The question investors are now asking: will the stock market rebound sustain itself in coming weeks? The answer may hinge on whether diplomatic tensions continue to ease and whether corporate earnings surprise to the upside.

De-escalation Signals Shift Market Sentiment

The primary catalyst for today’s equity recovery was a marked shift in rhetoric from the White House. President Trump indicated a preference for negotiated settlements regarding Greenland’s strategic position, emphasizing “immediate negotiations” and downplaying the use of coercive measures. This contrasted sharply with earlier messaging that had rattled global financial markets. Trump also dismissed Tuesday’s market decline as trivial, projecting confidence that the U.S. stock market would experience substantial appreciation in the near term.

The market’s reprieve was palpable. On Tuesday, equities had sold off sharply as investors grappled with the implications of potential trade wars with European allies. The administration’s proposed tariff regime—10% on eight European nations effective February 1, escalating to 25% by June unless Greenland becomes part of U.S. territory—had triggered a pronounced risk-off environment. Today’s moderation in confrontational language appears to have convinced traders that a negotiated resolution is more probable than a trade escalation spiral.

Safe-Haven Assets Provide Clues to Market Psychology

Bond prices moved higher today, offering insight into how financial markets are repositioning. The 10-year Treasury yield declined 1.4 basis points to 4.279%, reversing a portion of Tuesday’s spike to 4.31%. Geopolitical uncertainty continues to support demand for U.S. government debt as a refuge asset, even as safe-haven flows have begun to normalize alongside the improving diplomatic outlook.

However, inflation expectations remain embedded in market pricing. The 10-year breakeven inflation rate reached a 3.25-month high of 2.343%, suggesting that markets are not yet convinced that trade policy uncertainties will simply vanish. The Treasury faces additional headwinds this week with a $13 billion auction of 20-year bonds scheduled, which could limit gains in intermediate-duration securities.

Overseas fixed-income markets displayed mixed signals. Germany’s 10-year bund yield edged higher by 9 basis points to 2.868%, while the U.K. 10-year gilt yield retreated 1 basis point to 4.448%. Japan’s 10-year government bond yield had stabilized at 2.285% after spiking to a 27-year peak of 2.359% on the prior session, alleviating some concerns about global bond market dislocations.

Precious Metals Surge as Safe-Haven Appeal Persists

Gold prices demonstrated the dual nature of current market dynamics: advancing another 2% to establish fresh all-time highs even as equities recovered. The price action underscores that while risk appetite has returned to equity markets, investors remain cautious about medium-term stability. Mining equities benefited from the precious metals rally, with Freeport McMoRan climbing more than 2% and other mining names such as Hecla Mining, Newmont Mining, Barrick Mining, and Coeur Mining each gaining over 1%.

The persistence of gold’s uptrend despite equity gains suggests that portfolio managers are maintaining diversification hedges. Beyond geopolitical concerns, worries about Japan’s fiscal trajectory and potential central bank divergence are supporting precious metals as a store of value.

Energy Sector Surge Driven by Arctic Weather and Demand Dynamics

Natural gas became the week’s standout performer, rocketing more than 21% to a six-week peak, building on a prior session’s 26% advance. An Arctic cold front bearing down on much of the eastern United States is expected to boost heating demand significantly. Additionally, the potential for well freeze-offs and production disruptions in the U.S. natural-gas sector is tightening supply. Energy sector equities rallied accordingly, with Expand Energy soaring more than 5%, and positions such as Antero Resources, Range Resources, and EQT Corp each climbing more than 4%. EOG Resources and CNX Resources added more than 3%, while Coterra Energy gained more than 2%.

The rally in energy stocks reflects a confluence of factors: tightening supplies due to weather, sustained geopolitical premium pricing, and a shift away from the energy sector’s prior underperformance. Whether this momentum can be maintained will depend on whether Arctic conditions persist and whether supply constraints worsen.

Semiconductor Leadership Propels Broader Market Gains

Chip manufacturers emerged as the session’s most prominent gainers, providing essential support to the overall market rebound. ARM Holdings surged more than 7% following a Susquehanna Financial analyst upgrade to positive, with a price target of $150. Intel advanced more than 6%, Advanced Micro Devices climbed more than 4%, and Micron Technology gained more than 3%. Supporting players such as Analog Devices, Microchip Technology, and Texas Instruments each appreciated more than 2%.

The chip sector’s outperformance reflects both technical positioning after prior weakness and growing confidence in artificial intelligence deployment demand in the coming quarters.

Mixed Performance Across Corporate Earnings

Early quarterly results have been encouraging, with 88% of the 33 S&P 500 companies reporting so far beating profit expectations. Teledyne Technologies led S&P 500 gainers, advancing more than 8% after posting Q1 net sales of $1.61 billion, exceeding consensus estimates by $40 million. United Airlines Holdings climbed more than 2% on reporting Q4 adjusted earnings per share of $3.10, surpassing expectations of $2.92.

Conversely, some profit disappointments weighed on performance. Netflix declined more than 4% after guiding to a full-year operating margin of 31.5%, trailing consensus of 32.4%. TE Connectivity fell more than 2% subsequent to forecasting Q2 net sales of $4.70 billion, roughly $50 million below expectations. Kraft Heinz plummeted more than 6% after Berkshire Hathaway registered over 325 million common shares for potential sale, signaling a potential reduction in the long-standing investment position.

Economic Calendar and Monetary Policy Focal Points

The week ahead will test whether the stock market rebound can persist amid a slate of consequential economic data releases. The Federal Reserve has shifted market rate-cut expectations to just a 5% probability for a 25-basis-point reduction at the January 27-28 policy meeting. Attention will focus on whether data surprises to the upside or downside.

Key releases include pending home sales data, initial jobless claims, Q3 GDP figures, personal spending and income reports, and the core PCE inflation gauge preferred by monetary authorities. By week’s end, the manufacturing PMI and University of Michigan consumer sentiment index will provide additional sentiment readings.

Morgan Chase Securities projects that Q4 S&P 500 earnings will expand 8.4% year-over-year, with growth outside the Magnificent Seven mega-cap technology names anticipated at 4.6%. These estimates suggest that valuations remain reasonable and that profit momentum can support equity gains.

Regulatory Uncertainty Continues to Weigh

The Supreme Court has not yet issued a ruling on challenges to reciprocal tariff provisions despite Tuesday’s hearing. The court will enter a four-week recess, meaning that tariff rulings are unlikely before early February. This regulatory ambiguity adds an element of uncertainty that could prompt equity volatility if conditions deteriorate.

Additionally, speculation about the administration’s Federal Reserve Chair nomination continues. Markets perceived Kevin Hassett as the most dovish contender, supporting lower long-term bond yields and equity multiples. The possibility that a more hawkish candidate, such as Kevin Warsh, might receive the nomination has created additional uncertainty for fixed-income and equity valuations.

Global Market Mosaic

Overseas stock markets presented a mixed tableau. The Euro Stoxx 50 retreated 0.26%, pressured by the Greenland-related tariff threats. China’s Shanghai Composite edged up 0.08%, suggesting stabilization in the world’s second-largest economy. Japan’s Nikkei Stock 225 declined 0.41% to touch a 1.5-week low, with investors processing the implications of the Bank of Japan’s recent policy adjustments.

European policymakers sought to project calm. ECB President Christine Lagarde stated that additional U.S. tariff volleys would have only minor inflation consequences, though she emphasized that the uncertainty created by tariff threats posed a more substantive economic challenge than the tariffs themselves.

Conclusion: Can the Stock Market Rebound Prove Durable?

Today’s equity recovery offers encouragement to investors who endured Tuesday’s sharp selloff. Will the stock market rebound last? The answer depends on three variables: continued de-escalation of trade tensions, corporate profit momentum, and whether central banks maintain their data-dependent approach to policy adjustments. While headline risks remain—including the Greenland dispute, tariff negotiations, and Fed leadership uncertainty—the technical shift toward risk-on positioning suggests that some equilibrium may be establishing itself. Investors should monitor this week’s economic calendar closely for signals of whether growth remains resilient and inflation pressures persist.