Wall Street has witnessed a strong rebound after Donald Trump announced a framework agreement with Nato over Greenland and confirmed he would not proceed with planned tariffs on European countries.
The Dow Jones Industrial Average rose by 732 points, up 1.51 per cent to close at 49,220.6.
The S&P 500 gained 1.53 per cent, adding 103.68 points to finish at 6,900.54.
The Nasdaq Composite outperformed both indices, climbing 1.69 per cent, or 386.98 points, to end the session at 23,341.31.
Markets had already been trading higher earlier in the day but accelerated sharply after the president published the announcement on social media.
The rally followed a steep sell-off on Tuesday, the worst single-day decline since October, driven by fears that tensions between Washington and Brussels could escalate into a full-scale trade dispute.
Mr Trump made the announcement on his Truth Social platform following discussions with Nato chief Mark Rutte.
“We have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region,” he wrote, adding that the agreement would benefit both the United States and Nato member states if finalised.
Donald Trump made the announcement after meeting Nato chief Mark Rutte | GETTY
He also confirmed that planned tariffs on European allies would not go ahead.
“Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1,” he said.
The President had previously threatened duties of up to 10 per cent on European countries that refused to support American control of the Danish territory.
Tuesday’s rout marked the heaviest losses for major US indices since October 10, fuelled by concerns that a renewed trade confrontation could undermine economic growth.
The so‑called “Sell America” trade, which first emerged after last April’s “Liberation Day” tariff announcements, had resurfaced during the session.
Nasdaq were among the markets to bounce
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Mark Hackett, chief market strategist at Nationwide in Boston, said sentiment shifted once the President clarified his position.
“The market bounced when he said we wouldn’t use force,” he said.
“Following the events of last April, investors are catching on that his negotiating style is very different than past administrations, so uncertainty is a natural outcome.”
Brian Jacobsen, chief market strategist at Annex Wealth Management, said what the president did not say also reassured investors.
“It wasn’t so much what the president said that mattered as what he didn’t say,” he noted. “He didn’t reiterate his tariff threat against Europe.”
Market volatility eased following the announcement.
The VIX index fell by more than eight per cent to 18.43, having reached its highest level since November during the previous session.
Traders often view readings above 20 as a sign of heightened market stress.
European markets reacted more cautiously.
The STOXX 600 ended the day marginally lower, down 0.02 per cent, while London’s FTSE 100 closed slightly higher, rising 0.11 per cent.
The EU previously froze the EU-US trade deal following the Greenland tariff threats
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REUTERSEnergy, materials and technology stocks led gains in the United States.
Shares in major technology companies including Nvidia, Tesla, Apple and Alphabet all finished higher.
Bond markets also showed signs of stabilising after recent losses.
US 30‑year Treasury yields fell by 2.6 basis points to 4.8951 per cent, having approached the five per cent mark earlier in the week for the first time since September.