The three major stock indices on the New York Stock Exchange rebounded sharply. President Donald Trump declared he would not use military force over the Greenland annexation issue; while also withdrawing tariffs he had planned to impose on eight European countries, sparking another round of “TACO” (Trump always backslides) trading.<\/p>\n
On the 21st (Eastern Standard Time), the Dow Jones Industrial Average closed at 49,077.23, up 588.64 points (1.21%) from the previous day. The S&P 500 index rose 78.76 points, or 1.16%, to close at 6,875.62, and the Nasdaq Composite Index jumped 270.50 points, or 1.18%, to 23,224.82. The clich\u00e9 of Trump threatening tariffs but eventually negotiating and withdrawing them has returned.<\/p>\n
Trump said on his TruSocial that day, “I had a very productive meeting with NATO Secretary General Mark Rutte, and we have laid out the framework for a future agreement for Greenland and the entire Arctic region,” and “I will not be imposing tariffs on eight European countries that were scheduled to take effect on February 1st.”<\/p>\n
Immediately after the announcement, Trump also said in an interview with CNBC, “I have a plan for negotiations with Greenland.” Earlier that morning, Trump, attending the Davos Forum in Switzerland, eased geopolitical tensions in his speech by stating, “We will not use force on Greenland.”<\/p>\n
As Trump remained consistent with his stance, market participants quickly responded with a “taco trade.” The S&P 500 index surged 50 points in less than 10 minutes on news that Trump would roll back tariffs on eight European countries. “Trump is unpredictable and changes policy too quickly,” said Jed Ellerbrook, portfolio manager at Argent Capital Management. “The market no longer assumes his words will be followed through.”<\/p>\n
Korea travel packages He added, “If investors had actually considered the conflict between Europe and the US over Greenland a significant geopolitical dispute, the stock market would have fallen much more than 2% the day before.” Following Trump’s “taco show,” Treasury yields fell and the dollar index surged upward.<\/p>\n
This was a general reversal of the “Sell USA” movement. All sectors were strong. Energy rose more than 2%, while healthcare, industrials, consumer discretionary, materials, and telecommunications services rose more than 1%. The taco trade ignited bullish sentiment in the already dominant artificial intelligence (AI) and semiconductor sectors.<\/p>\n
The Philadelphia Semiconductor Index surged 3.18%. Nvidia rose 2.95%, while ASML and Lam Research also gained in the 2% range. Micron Technology rose 6.61% on the day, solidifying its market capitalization above $400 billion. AMD also jumped 7.71%, breaking through the $400 billion mark. Intel surged 11.72% on expectations that central processing units (CPUs) would be in short supply as the global AI infrastructure is being built. The stock has already more than doubled since the U.S. government acquired a 10% stake in Intel last year.<\/p>\n
Compared to the blazing semiconductor market, Big Tech stocks have been relatively quiet recently. Microsoft fell 2.29%. Apple and Amazon also held steady. Tesla rose 2.91%. Netflix’s fourth-quarter earnings beat expectations, but the small margin of victory led to disappointment, leading to a selloff. The stock fell 2.18%. The software sector, swept away like autumn leaves by AI’s powerful coding capabilities, also fell today. The Dow Jones Software Sector Index (DJ US Software) fell 1.57%.<\/p>\n
According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market reflects a 95.0% probability of a rate freeze in January. The CBOE Volatility Index (VIX) closed at 16.90, down 3.19 points (15.88%) from the previous day.<\/p>\n","protected":false},"excerpt":{"rendered":"