Stocks Rebound as Trump Expounds on Greenland, Equity Market

US equities reversed early losses during Donald Trump’s speech at the World Economic Forum in Davos when the US president said he didn’t want to use excessive force to acquire Greenland

The S&P 500 Index rose 0.3% as of TK9:33 a.m. in New York. The rebound followed the benchmark’s slump in the prior session on worries over the risk of a full-blown trade war with Europe as Trump steps up his push to take over Greenland. The Nasdaq 100 inched higher. Wall Street’s fear gauge, the Cboe Volatility Index or VIX, pulled back from around 20, the highest since November.

Trump reiterated that the US needs to own Greenland for national and international security reasons and called for “immediate” negotiations for the US to acquire Greenland before saying the US doesn’t want to use excessive force to get the country. He was also optimistic on equity gains, saying the stock market will double.

Global bonds found firmer footing after long-dated Japanese debt clawed back some losses following Tuesday’s plunge. The move helped steady Treasuries, with 30-year US yields one basis point lower, shorter maturities also edged lower.

“This is a positioning-driven shock amplified by rising global yields, not a structural macro break,” Goldman Sachs Group Inc. trading desk wrote in a note Tuesday. “Tariff GDP damage is real but small, inflation effects muted, and policy bias still easier, not tighter.”

Some strategists said the pullback is creating buying opportunities, noting that risk assets have historically looked through geopolitical flare-ups unless they trigger a sustained surge in oil prices.

Haven demand remained robust. Gold climbed to another record high while silver also advanced.

Equity rotation continued to define trading. The Russell 2000 has outperformed the so-called Magnificent Seven by more than 10% year-to-date, underscoring a shift toward smaller companies.

“Russell 2000 saw its 12th consecutive day of outperformance versus S&P 500, which hasn’t happened since 2008 and our macro desk continues to see strong demand for small caps,” Goldman traders wrote.

For some nine months now, the TACO trade has proven a winner. Short for “Trump Always Chickens Out,” it emerged in the wake of the president’s global tariff rollout — and rollback — in April. It quickly became the rallying cry for investors tuning out the more extreme White House threats as they kept buying risky assets.

Still, technical signals are flashing caution. Analysts at Tier1Alpha warned the S&P 500 is approaching what’s known as a negative gamma zone, a setup that can amplify market swings as dealer hedging reinforces prevailing momentum, a risk heightened as buyback blackout periods near.