A right between the United States and Europe over the future of Greenland sent the S & P 500 for a loop this week, only to see the broad market index end the holiday-shortened period just shy of where it started. Over the weekend, President Donald Trump ramped up his efforts to annex the Danish territory of Greenland by threatening to impose new tariffs on imports from eight European nations that opposed the move. The duties – targeting long-time allies Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland – were set to take effect on Feb. 1, starting at 10%. Traders returning from the Martin Luther King Jr. holiday found the market in a tailspin. On Tuesday, the benchmark S & P 500 tumbled about 2% , as did the Nasdaq Composite . The Dow Jones Industrial Average slumped 870 points. All that changed Wednesday, when the president announced that he and NATO Secretary General Mark Rutte had “formed the framework of a future deal with respect to Greenland” and removed the threatened tariffs. In response, U.S. stocks surged Wednesday and the rally continued Thursday, leaving the the S & P 500 lower by just a fraction on the week. .SPX mountain 2026-01-20 S & P 500 since Jan. 20 “The big question last week was, ‘Why weren’t markets really reacting to a lot of these issues until they did this week?'” Tom Garretson, senior portfolio strategist at RBC Wealth Management, asked in an interview on CNBC. “Tariff threats will be there but, at the end of the day, the administration’s broadly seen the negative market impact. I think the market is kind of relying on the idea that if they do push too far on the tariff threats and whatnot, that they’ll start pulling back.” In other words, the market no longer thinks all of Trump’s declarations are going to be implemented, said Jed Ellerbroek of Argent Capital Management. If investors thought they were, the market would’ve posted a much bigger loss than the 2% seen on Tuesday, he added. “It’s just extremely hard for the stock market to price in President Trump and his actions and behaviors,” Ellerbroek reiterated. ‘Expect some volatility’ Even as investors recycled last Spring’s “TACO” trade – for ” Trump Always Chickens Out ” – there’s still the threat that geopolitical unrest, especially as it pertains to trade, has the potential to rattle markets. On Thursday, for example, Greenland Prime Minister Jens-Frederik Nielsen said that while he didn’t know what was in the “framework” deal Trump agreed with Rutte, Grreenland’s sovereignty is non-negotiable, echoing remarks made earlier by Danish Prime Minister Mette Frederiksen. “With valuations where they are, there’s less and less room for cushion, and I think you saw a little bit of that indigestion in markets in the beginning of this week. We would expect, as volatility and headlines increase, you could see more of that throughout the year,” said Scott Ellis, managing director, corporate credit at Penn Mutual Asset Management. “We expect some volatility.” Still, Ellis is still constructive on the outlook for stocks in 2026 and believes diversification is key for navigating future storms. Eric Parnell, chief market strategist at Great Valley Advisor Group, said investors should keep their eye on macroeconomic data, noting the market’s underlying fundamentals remain “strong.” Volatility can “create buying opportunities,” he said. “It’s shocking news for the market in the short term to say, ‘Okay, we’re talking about annexing Greenland. We’re going to apply tariffs to these countries.’ It upset the markets on Tuesday, but no sooner was the market reacting to that, then that narrative was reversed by the White House, and markets rallied,” he said. Against that backdrop, “international and emerging [markets] had a great year last year, and we continue to be constructive on non-U.S. markets,” Parnell said.
