After President Donald Trump signaled a retreat from planned European Union tariffs, citing a new “framework” deal on Greenland, the rapid de-escalation reignited the “TACO trade,” validating bullish investment strategies and reversing recent market jitters.
Crisis Defused In Davos
Following a “very productive” meeting with NATO Secretary General Mark Rutte at the World Economic Forum in Davos, Trump announced he would scrap the threatened 10% levies on the bloc. The breakthrough, described as a “framework of a future deal” regarding Greenland, immediately eased transatlantic trade tensions.
Eric Teal, Chief Investment Officer for Comerica Wealth Management, told Benzinga that the “Greenland crisis appears to be defusing,” sparking a relief rally driven by the removal of global policy uncertainty.
‘Don’t Blink’
Experts suggest this turnaround reinforces the resilience of the current bull market. Gina Bolvin, President of Bolvin Wealth Management Group, also wrote to Benzinga that investors should not be surprised that “buy-the-dip has proven to be a solid investment strategy” once again.
“The case for a continued bull market remains strong,” Bolvin stated, pointing to holding consumer spending and the stimulus provided by the “OBBBBA” legislation.
She noted that the market rally is broadening beyond the Magnificent 7 AI leaders into a healthier, sector-wide advance. Her advice to investors navigating the volatility is stark: “Don’t blink or you’ll miss it.”
Value And Energy Lead The Charge
While details on the Greenland framework remain scarce, the market shift is already visible in specific sectors.
According to Teal, the gains have been most pronounced in traditional value sectors, including financials, which are better insulated from policy shocks. Energy companies are also rallying, supported by rising crude prices linked to unrest in Iran and colder weather forecasts.
Benchmark Indices Turn Positive For 2026
Following these developments, the Nasdaq 100 index turned positive on a year-to-date basis with a 0.48% gain, whereas the S&P 500 index was 0.25% higher and the Dow Jones index returned 1.44% in the same period.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed lower on Tuesday. The SPY was down 2.04% at $677.58, while the QQQ declined 2.12% to $608.06.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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