Introduction
Wall Street has had one of those days when your portfolio is whipping you around. On Wednesday, the stock market surged sharply on the news that President Trump had withdrawn threats to impose tariffs on Greenland, and the Dow rose by almost 700 points, only to end the day up 588 points.
I have years of market observation, but this rollercoaster left even market veterans with their mouths open. One day, you are looking at the worst sell-off since October, the next day, you are looking at the largest one-day increase ever. That is what occurred when Trump declared a Greenland consent system with NATO on January 21, 2026.
S&P 500 surged 1.16, and then Nasdaq rose 1.18, and everyone could now take a breath. However, here is the point: this was not just about one-day numbers. This entire Greenland affair demonstrated to us just how delicate the mood of the market is regarding trade policy and the tensions between geopolitics.
What really went wrong with the Greenland Deal?
The Framework that Changed it All
At around 2:30 p. m. ET, Trump wrote on Truth Social that he and NATO Secretary General Mark Rutte had worked out the basis of a future deal on Greenland. In a few minutes, the shares had leaped up like a starting gun.
It was a rather vague announcement, frankly speaking. Trump referred to it as the final long-term deal but did not provide numerous details. He teased about mineral rights to the U.S. and a system named the Golden Dome, the missile defense system. When CNBC reporter Joe Kernen asked him the details, Trump replied that it was a bit complicated andthat they would explain it later.
But you know what? Details were not important in the market. The point was that those 10 percent tariffs against the eight European countries were on the shelf overnight.
Threats to Framework in 24 Hours.
Let’s rewind a bit. Tuesday was the worst day of the markets since October. The Dow lost 870 points, the S and P 500 lost 2 percent, a nd the Nasdaq lost 2.4 percent. Why? Since Trump had used days of aggressive rhetoric about seizing Greenland, he even denied that he would use military action.
Those tariffs were glaring at eight NATO allies: Denmark, Norway, Sweden, Finland, France, Germany, the UK, and the Netherlands. The tension was real. European leaders were outraged. It even suspended a trade agreement with the U.S. by the EU.
Then, Trump warmly changed his tone on Wednesday morning at Davos. He informed the world leaders that he would not apply excessive force to seize Greenland. Markets ticked up modestly. However, the actual blow fell in the afternoon with that framework announcement.
Disaggregating the Market Response
The Numbers Tell the Story
The following are the closings of the major indexes on Wednesday:
- Dow Jones Industrial Average: Higher 588.64 points (1.21) to 49,077.23.
- S&P 500: Up 78.76 points (1.16%) to 6,875.62
- Nasdaq Composite: Gained 270.50 (1.18) points to 23,224.82.
At midday trading, the Dow was more than 700 points up, a 1.6 percent rise, which I referred to. The rally subsided modestly at the end but still marked a colossal win back in losses by Tuesday.
Treasury yields were also relaxed, falling on the 10-year note to 4.30 to 4.25. It may not be a lot, but it is a definite indication that investors were not so much concerned with U.S. credibility and stability.
Who Won and Who Lost
United Airlines increased 2.2 per cent following more than expected earnings. Scott Kirby, the CEO, stated that their revenue momentum was carrying them into 2026, which must have seemed more realistic after the tariff threats were eliminated.
Intel also became one of the largest tech winner stocks of the day, although that was somewhat independent news. The chipmaker is not doing so well, hence any positive news is good.
Meanwhile, Netflix has reached a 52-week low even after surpassing earnings. They have a poor Q1 forecast that failed investors – they are projecting 76 cents per share compared toanalysts’s forecasting 81 cents. Even good news cannot be helpful, you know, in case the advice is not strong.
Kraft Heinz plummeted 5.7 percent after Berkshire Hathaway indicated that it might divest its huge holding in the corporation. That is another drama playing out.
The Greenland Case of Why This Should Matter More than You Think
The Arctic Is the New Hotspot
To tell the truth, at the time when Trump initially started discussing the idea of purchasing Greenland during the first term, a vast majority of people believed that it was a joke. However, the strategic significance of the Arctic region has increased exponentially.
Climate change is introducing new shipping routes and revealing precious deposits of minerals. Greenland is in the centre of it all. It contains rare earth minerals, possible oil and gas fields, anda strategic location of military bases.
The U.S. is already in Pituffik Space Base (which may be familiar to you as Thule Air Base). This framework deal is likely to include the deployment of U.S. military forces to more bases rather than just that one, according to diplomatic sources who confided in CBS News.
The Pattern We Can’t Ignore
And this is what is interesting and somewhat frightening to investors: this is a trend. Trump threatens drastically, markets panic, he pulls a deal of some sort, markets leap.
The traders have gone to the extent of calling it the TACO trade – Trump Always Chickens Out. It is not me being political; it is literally what some Wall Street folks are calling it. The concept is to buy the dip when Trump threatens something drastic, and later to make money on him having to invariably retreat.
However, one can only play that game a few times before something breaks. What will he do when he does not retreat? Or when markets cease to take the trend?
The Bigger Picture to Investors
Volatility Is the New Normal
You are not alone when feeling tired of these crazy spins. The whipsaw on Wednesday was reminiscent of the April Liberation Day tariffs that plunged world markets into months of uncertainty.
The issue is that it becomes extremely difficult to plan when there is uncertainty about the policies of companies. What do you do when you are starting to construct a factory or invest in markets when you are uncertain about where to build it tomorrow, or what markets you will invest in, because an individual posted something on social media?
The billionaire CEO of Citadel, Ken Griffin, made it very clear at Davos: “Investors worldwide are not interested in witnessing an intensification of the strains of global trade. He observed that the tariff expenses are customarily incurred by the home households and corporations as opposed to foreign rivals.
What the European Markets are telling us
The European stocks, too,o had their rollercoaster ride. The Stoxx 600 rose 1.1% followinga much lower opening. Volkswagen was up 5.2 percent and was likely glad those tariffs were not coming.
European leaders are not celebrating. The Foreign Minister of Denmark was cautiously optimistic that parties would be able to meet American security interests in the Arctic without violating the red lines of Denmark. The Finance Minister of Germany was more pessimistic, basically adding that it is a good thing they are talking, but we will see what will happen.
The Future of the World: To See
The Framework Is Only the Starting Point
Vice President JD Vance and Secretary of State Marco Rubio were designated by Trump to continue the negotiations. That informs you that this framework thing is not a final deal; it is merely an outline.
The specifics that should be negotiated are: what exactly the U.S.
obtains regarding the right to the mineral, how many military bases, what Denmark and Greenland obtain in the process, and likely a hundred more.
This is the subject of an extraordinary meeting that the European Council is now having. They will not simply lie down and take anything Trump offers.
Markets Could Stay Jumpy
The major indexes are in the negative, despite the gains made on Wednesday. The Market indexes are over 0.6, 0.9, and 1.2 down on the Dow, the S&P 500, and the Nasdaq, respectively,y as of Wednesday’s close.
Gold continued to climb on Wednesday, gaining more than 1 percent, and boosting its annual returns to more than 11 percent. As long as gold continues rising even during a stock rally, it is a sign that investors remain on the side of the road. They’re hedging their bets.
Treasury yield 10-year barely shifted, even as stocks shot. Ordinarily, yields should fall further if investors were indeed confident enough. The reason they are not is that people are having one eye on the exit.
What Investors Really Need to Do
Don’t Try to Time These Swings
I understand how tempting it is to make a speculation that you can trade around the Trump policy announcements. There was a group of people who had made money on Wednesday by buying on Tuesday’s dip. However, there is one person who makes it, and another who gets on the wrong side.
Most investors are better off keeping a diversified portfolio and not fleeing their skins when such one-day actions occur. Yeah, Tuesday was brutal. However, when you sold everything in a frenzy, you did not get the recovery on Wednesday.
Look Out at the Real Economy
Executive profits are more significant than presidential tweets over time. Dealing with companies that are doing well, such as United Airlines, will be fine despite the Greenland drama.
We are going into the Q4 2025 earnings season. That is where you ought to be concentrating on. Are businesses increasing revenue? Expanding margins? Gaining market share? Those are important questions.
Geopolitical Risk is here to stay.
Whether it is Greenland, China trade friction, or any other matter, this administration has proved that it is ready to use economic policy as a geopolitical instrument. That creates volatility.
Audiences are moving more capital into defensive areas or overseas markets to decrease vulnerability to the U.S. whiplash in policy. Some are simply embracing the volatility as the cost of entry to these markets.
Conclusion
The stocks surging on the news of the Trump plan to make the Greenland deal were a huge relief rally on the part of investors, and the Dow shot up by almost 700 points at its peak and closed up 588 points on Wednesday. However, the uncertainty surrounding the policies flung this rollercoaster week into the limelight of how sensitive the markets are.
The framework agreement with NATO calmed down immediate trade war anxiety with the European partners. That’s good news. But that history of titanic threats and last-minute bargains provides a hyperventilating atmosphere to those attempting to take long-term investment decisions.
My advice? Be diversified, concentrate on firms with solid fundamentals, and do not attempt to trade each Trump policy announcement. The performance of portfolios on Wednesday was magnificent, but it does not alter the reality that the volatility of geopolitical issues is going to remain.
Keep watching this Greenland situation grow. A new sell-off may happen in case the negotiations fail. In the event that they do, we stand a chance of having sustainable stability. Buckle up anyway, it will be an interesting year.
Would you like to be ahead of such market moves? Stick to the basics, keep the plan, and keep in mind that the success or failure in a day does not determine your success in the long term.
FAQs
A: Markets shot up as Trump withdrew his threat to place 10 percent tariffs on eight European nations beginning February 1. At one point, the Dow shot up almost 700 points due to the fact that the investors were happy that a trade war with NATO allieswase not going to happen. The structure involving NATO, despite the lack of specifications, eliminated the hard threat that had brought the selloff on Tuesday.
A: Info is rather sketchy, to tell the truth. Trump and NATO Secretary General Mark Rutte declared the establishment of a foundation for a future agreement between Greenland and the Arctic region. It appears to include U.S. mineral rights and increased military presence, such as the proposed Golden Dome missile defense system by Trump. The thing is that Denmark remains sovereign, and the U.S. receives more access and resource rights.
A: The billion-dollar question. Trump put VP JD Vance and Secretary of State Marco Rubio in charge of the negotiations, which indicates that there is still much more to be done. European leaders are optimistic with caution as well as beingskepticalc. The framework is only a sketch – real details must be bargained. Markets jumped on the de-escalation, but we have yet to see whether it will be a real deal or not.
A: Probably yes. This Greenland scenario was a demonstration of the rapid change in policy and the drastic response of the market. Wednesday gains notwithstanding, the key indexes remain down over the week, and the gold continues to increase,e which is an indication of the continued nervousness. Trade policy will continue to swing as long as the policy can be unpredictable, le as in this instance.
A: European markets were better on Wednesday, with the Stoxx 600 rising by 1.1 percent and Volkswagen surging by 5.2 percent. However, European leaders are not careless. They rejoice that tariffs have been canceled but doubt the long-term consequences. The European Council is sitting down to deliberate on the situation. Markets in Europe appear to be operating in a wait-and-see mode and not a celebratory one.
