U.S. stock futures signalled a higher open on Thursday, indicating that equities could extend the sharp rebound seen in the previous session.
Investor sentiment has been buoyed by signs of de-escalation in the dispute surrounding President Donald Trump’s bid to gain control of Greenland. On Wednesday, Trump ruled out the use of military force and later said that a “framework” agreement on the Arctic territory was taking shape.
Following what he described as a “framework” understanding reached with NATO Secretary General Mark Rutte, Trump also stepped back from earlier threats to impose sanctions on European countries that opposed his plans.
Some market watchers view the renewed strength in equities as a revival of the so-called “TACO trade” — shorthand for “Trump Always Chickens Out” — reflecting the belief that the president often retreats after rattling markets with aggressive tariff threats.
“There are a lot of similarities with the Liberation Day market wobble in April 2025 and now,” said Russ Mould, investment director at AJ Bell. “In both situations, Trump took an aggressive stance and then backed down after financial markets wobbled.”
He added, “The US president has a keen eye on what happens with bonds and stocks, and the last thing he wants is to be accused of destroying people’s wealth.”
Markets were highly volatile on Wednesday. Stocks surged early, pared back gains by late morning, and then rallied again in the afternoon to close sharply higher.
All three major benchmarks finished the session with solid advances, partially recouping Tuesday’s steep losses. The Dow Jones Industrial Average rose 588.64 points, or 1.2%, to 49,077.23. The Nasdaq Composite climbed 270.50 points, or 1.2%, to 23,224.82, while the S&P 500 advanced 78.76 points, or 1.2%, to 6,875.62.
The swings reflected investors reacting to Trump’s evolving remarks on Greenland. Early buying followed his comments at the World Economic Forum in Davos, Switzerland, where he explicitly ruled out military action.
“We probably won’t get anything unless I decide to use excessive strength and force, where we would be, frankly, unstoppable. But I won’t do that. Okay?” Trump said.
“Now everyone’s saying, ‘Oh, good.’ That’s probably the biggest statement I made, because people thought I would use force,” he added. “I don’t have to use force. I don’t want to use force. I won’t use force.”
Trump instead called for “immediate negotiations” with Denmark to “discuss the acquisition of Greenland by the United States.”
Later in the day, sentiment improved again after Trump said on Truth Social that the “framework” agreement emerged from a “very productive” meeting with NATO’s secretary general, and that he would not proceed with tariffs he had threatened against several European nations.
Sector performance was broadly positive. Oil service stocks led gains as crude prices moved higher, with the Philadelphia Oil Service Index jumping 4.8% to its highest close in more than a year.
Computer hardware shares also surged, pushing the NYSE Arca Computer Hardware Index up 4.4%, while biotechnology stocks climbed, lifting the NYSE Arca Biotechnology Index by 3.6%.
Strength was also evident in semiconductor, transportation and housing stocks, although software and gold-related shares lagged the broader market rally.
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