On Wednesday, January 21, 2026, U.S. and global equity markets rebounded sharply following news that tariff threats tied to Greenland-related policy were withdrawn. Major indexes recovered a sizable portion of recent declines as risk sentiment improved and uncertainty around trade and geopolitical tensions eased.
What Moved
U.S. major stock indexes rallied — the S&P 500 rose more than 1%, the Dow Jones Industrial Average climbed about 1.2%, and the Nasdaq gained similarly.
Smaller cap stocks outperformed with a Russell 2000 advance near 2%.
Global equities climbed in Europe and Asia following U.S. strength.
Why It Moved Today
Market positioning shifted after President Donald Trump publicly backed off threatened tariffs on European allies in connection with a proposed framework related to Greenland, reducing near-term geopolitical and trade uncertainty that had sparked sharp selling in the prior session.
Investors responded to the clarification that new tariffs would not be imposed, which helped restore risk appetite built up before the earlier sell-off. Equities that had been hit hardest by geopolitical risk, including cyclicals and tech, participated in the rebound.
Why It Matters Now
Wednesday’s price action showed that markets remain sensitive to headline risk tied to geopolitical and trade policy, and that clarity on policy direction can quickly reverse risk-off positioning.
In the near term:
Risk assets may continue to stabilize if the tariff threat remains off the table.
Volatility could stay elevated should new policy uncertainty arise again.
Equity breadth may widen if follow-through buying confirms Wednesday’s rebound beyond headline relief.
Absent fresh shocks, the immediate window ahead will likely test whether markets can build on this relief-driven rally or revert to broader risk repricing.
