New York, Jan 21, 2026, 13:40 EST — Regular session
- After Tuesday’s sharp selloff, the Dow climbed roughly 0.6% in afternoon trading.
- Trump’s eased rhetoric on Greenland gave risk appetite a boost, even as tariff concerns lingered.
- Up next: weekly jobless claims Thursday, followed by the Fed meeting next week.
The Dow Jones Industrial Average (.DJI) rose around 0.6% on Wednesday, clawing back some losses from the previous day after President Donald Trump dismissed any intention to use force in his attempt to acquire Greenland. By early afternoon, the blue-chip index had gained roughly 297 points, trading near 48,786.
The bounce is crucial as the market weighs if this week’s tariff threats will become actual policy or just fade as negotiating noise. On Tuesday, the Dow dropped 870.74 points, or 1.8%, with the S&P 500 down 2.1% and the Nasdaq falling 2.4%, following Trump’s announcement of a 10% import tax on goods from eight European countries starting in February.
At Davos, Trump ruled out military action, marking a notable shift that helped ease the geopolitical risk premium dragging stocks down the previous day. “One of the reasons why the market is bouncing back is Trump stressed that he does not intend to use force,” said Damian McIntyre, head of a multi-asset solutions team at Federated Hermes. He added that a more diplomatic outcome now seems likely. Reuters
Strategists pointed to what Trump left unsaid as the catalyst for the relief rally. “The market bounced when he said we wouldn’t use force,” Mark Hackett, chief market strategist at Nationwide, noted. Brian Jacobsen, chief market strategist at Annex Wealth Management, added that the rally was driven more by the absence of new tariff threats than by any specific comments. Reuters
Merck and UnitedHealth provided some of the biggest lifts for the Dow early on, contributing around 40 points combined. Walt Disney, Nike, and Chevron also added support. Since the Dow is price-weighted, a $1 move in any stock can sway the index by about 6.16 points.
Tuesday’s slide was worsened by steep losses in some headline-grabbing stocks. IBM dropped 4.1%, while 3M plunged 6.9%, together shaving roughly 150 points off the Dow, according to MarketWatch’s tally.
Investors looked past geopolitics to digest new economic data that muddle the rate outlook. U.S. pending home sales dropped 9.3% in December, hitting a five-month low, the National Association of Realtors reported. This signals soft housing demand, despite mortgage rates easing from their recent peaks.
Rate expectations continue to drive moves among the Dow’s industrial and financial giants, with the Fed firmly in focus. A Reuters poll taken between Jan. 16 and 21 shows most economists now predict the Fed will keep its benchmark rate steady at 3.50%–3.75% through the first quarter. Notably, many have dropped hopes for a rate cut by March.
Tuesday might not be an isolated event. Reuters highlighted investor worries that fresh tariff news could inflict deeper, more persistent market damage than the usual quick recoveries. This comes after recent volatility rattled stocks, long-dated Treasuries, and the dollar in the previous session.
The Federal Reserve will announce its next policy decision following the meeting scheduled for Jan. 27–28.
Traders will dig into Thursday’s weekly U.S. jobless claims report at 8:30 a.m. ET, hunting for signs that labor demand is easing enough to shift the rate discussion.
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