U.S. equity markets are positioned for a second consecutive week of gains as geopolitical tensions that rattled investors earlier in the week gave way to relief following President Trump's announcement of a framework agreement with NATO regarding Greenland.
The Week in Review
The major indexes posted back-to-back gains on Wednesday and Thursday after a rocky start to the week. On Thursday, the Dow Jones Industrial Average advanced 306.78 points, or 0.63%, to close at 49,384.01. The S&P 500 climbed 0.55% to 6,913.35, while the Nasdaq Composite gained 0.91% to settle at 23,436.02.
Those gains followed Wednesday's surge, when the Dow jumped nearly 590 points—its best single-day performance of the year—after President Trump reversed course on proposed tariffs targeting European countries.
"We've reached a framework agreement with our NATO allies on Greenland. The tariffs are suspended while we work out the final details."
— President Donald Trump, January 22, 2026
What Drove the Rally
The turnaround came after the president announced he had reached a preliminary agreement with European leaders on issues related to Greenland, the Danish autonomous territory that has been the subject of renewed U.S. interest. Earlier in the week, Trump had threatened broad tariffs on European imports as leverage in negotiations over the strategic Arctic territory.
The whipsaw action highlighted how sensitive markets have become to trade policy developments. While the specific terms of the Greenland framework remain unclear, investors appeared relieved that an immediate trade conflict had been averted.
Beyond the tariff news, markets drew support from solid economic data. Third-quarter GDP growth was revised upward to an annualized 4.4%—the strongest pace in two years. Weekly jobless claims remained near 200,000, suggesting continued labor market resilience, and the latest PCE inflation reading came in line with expectations.
Tech Leads the Way
Mega-cap technology stocks powered much of the week's advance. Meta Platforms surged 5.7% on the week after Jefferies named it a top pick with a $910 price target. Microsoft gained 1.5%, while Nvidia added 0.8% following bullish comments from CEO Jensen Huang at the World Economic Forum in Davos.
Huang told the Davos audience that artificial intelligence would create "six-figure blue-collar jobs" building chip factories—a message that reinforced enthusiasm about the sector's growth trajectory while addressing concerns about AI's impact on employment.
Earnings Season Continues
Fourth-quarter earnings season has largely exceeded expectations, providing additional support for stocks. According to FactSet, 79% of S&P 500 companies that have reported results have beaten earnings estimates, above the five-year average of 78%. In aggregate, companies are reporting earnings approximately 5.8% above analyst expectations.
The blended earnings growth rate for the quarter stands at 8.2%, which would mark the tenth consecutive quarter of year-over-year earnings growth if maintained. Analysts are projecting even stronger growth ahead, with estimates calling for 12.2% growth in Q1 2026 and 14.6% in Q2.
Looking Ahead to Friday
Markets face a lighter economic calendar on Friday, with the final reading of the University of Michigan consumer sentiment survey for January the main data point. Earnings reports from Booz Allen Hamilton and Ericsson are also on tap.
Index futures pointed to a mixed open Friday morning, with S&P 500 futures essentially flat after the previous session's gains. Nasdaq 100 futures edged lower as Intel shares continued to slide following the chipmaker's disappointing first-quarter guidance issued Thursday evening.
Investor Takeaways
For investors, the week's action reinforced several themes that are likely to persist in 2026. Trade policy uncertainty remains a wild card that can move markets sharply in either direction. Strong economic fundamentals—particularly consumer spending and employment—continue to provide a cushion against policy-driven volatility.
The technology sector's leadership also remains intact, with AI-related enthusiasm continuing to drive valuations in the space. However, the sharp reaction to Intel's guidance miss demonstrated that investors are still demanding execution and are willing to punish companies that fail to deliver on elevated expectations.
With the S&P 500 trading near all-time highs, market participants will be watching closely to see whether the index can break through to new records in the coming sessions or whether profit-taking emerges at elevated levels.
