U.S. stocks rebounded strongly on Wednesday, recovering from their steepest selloff in three months, after investors welcomed signals from President Donald Trump that he would not use military force in his effort to acquire Greenland.
Speaking to global leaders at the World Economic Forum in Switzerland, Trump ruled out military action but argued that only the United States could ensure security for the Danish territory, which he repeatedly described as a “big piece of ice.”
Market participants viewed the remarks as a de-escalation. Damian McIntyre, head of the multi-asset solutions team at Federated Hermes, said markets were rebounding because Trump emphasized a diplomatic approach. He added that while volatility may persist, the situation is likely to move toward a negotiated outcome.
The rally followed Tuesday’s sharp decline, when all three major U.S. indexes slid nearly 2% after Trump warned that fresh tariffs could be imposed on European allies unless the United States is allowed to buy Greenland.
Reflecting improved sentiment, the CBOE Volatility Index fell from recent highs, dropping 2.43 points to 17.59.
Large-cap technology stocks, which led the previous selloff, bounced back. Nvidia advanced 2.6%, while Alphabet climbed 3%.
By contrast, Netflix slid 4.5% after pausing share buybacks to help finance the purchase of Warner Bros Discovery’s studio and streaming assets.
With the exception of defensive sectors such as consumer staples and utilities, all other S&P 500 sectors traded higher.
By 11:25 a.m. ET, the Dow Jones Industrial Average rose 440.45 points, or 0.91%, to 48,929.04. The S&P 500 gained 67.95 points, or 1.00%, to 6,864.81, while the Nasdaq Composite added 266.11 points, or 1.16%, to 23,220.43.
Regional banks climb as investors track data and policy
Investors continued to follow commentary from executives and policymakers in Davos, while in Washington attention turned to the U.S. Supreme Court, which is hearing arguments related to Trump’s effort to remove Federal Reserve Governor Lisa Cook.
Strong earnings from small and mid-sized lenders lifted the regional banking index 3.5%, marking its highest level since December 2024. Charles Schwab gained 1.3% after posting stronger fourth-quarter profits, while Citizens Financial Group surged 6% following a 31.7% jump in quarterly earnings.
Elsewhere, United Airlines rose 1.7% after issuing an upbeat outlook for the current quarter and full year. Johnson & Johnson slipped 1.7%, despite forecasting 2026 revenue and profit above Wall Street expectations.
Earnings momentum remained strong overall. Of the 33 S&P 500 companies that reported results through last Friday, 84.8% exceeded profit forecasts, according to LSEG data, well above the long-term average of 67.3%.
Shares of U.S. nuclear energy companies also advanced after Trump voiced support for nuclear power procurement. NuScale Power climbed 4.4%, Nano Nuclear Energy rose 3.7%, and Oklo, backed by Sam Altman, gained 3.3%.
Meanwhile, Kraft Heinz dropped 5.5% after a regulatory filing indicated Berkshire Hathaway may reduce its 27.5% stake in the company.
