On Wednesday, January 21, 2026, major U.S. stock indexes staged a recovery after a steep sell-off the previous session, driven largely by political and geopolitical tensions. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all turned higher following remarks by President Donald Trump at the World Economic Forum in Davos, Switzerland. Initial stock futures had been weaker early in the day, reflecting volatility that persisted from the day before. 

The rebound followed Tuesday’s pullback, when indices posted their worst declines in months on renewed anxiety over Trump’s aggressive stance on acquiring Greenland and threats to impose new tariffs on several European nations. That sell-off pushed the S&P 500 down more than 2 percent and the Nasdaq nearly 2.4 percent, dragging markets lower across sectors amid heightened uncertainty. 

Investor sentiment improved markedly after Trump, speaking in Davos, said the U.S. would not use military force to acquire Greenland and instead pursue negotiations. He also highlighted broader economic policies, including housing affordability, which appeared to calm risk assets and lift futures for major indexes. As trading progressed, the S&P 500 and Dow both rose by about 0.7 percent, while the Nasdaq also advanced. 

Despite the rebound, caution remains palpable in markets. Safe-haven assets such as gold climbed to record levels, reflecting ongoing unease among investors, and the threat of tariffs continues to loom as a potential drag on sentiment. 

In summary, markets were volatile on Wednesday as traders balanced relief from Trump’s comments against lingering concerns over trade policy and geopolitical risk, illustrating how political developments continue to drive short-term equity market dynamics in early 2026.