U.S. stocks extended their rebound as easing tensions over President Donald Trump's push to acquire Greenland boosted investor sentiment. Trump ruled out using military force and said he reached a 'framework' deal on the Arctic territory with NATO Secretary General Mark Rutte, retreating from threats to sanction European nations opposed to his plans. Analysts said the rally reflected a return of the so-called 'TACO trade' ' 'Trump Always Chickens Out' ' as markets welcomed his softer tone.

Russ Mould of AJ Bell noted similarities with April 2025's 'Liberation Day' market wobble, when Trump also backed down after rattling investors. Meanwhile, economic data showed first-time jobless claims edged up to 200,000 for the week ended January 17, slightly below forecasts while November consumer prices rose in line with expectations.

Gold stocks saw substantial strength amid a sharp increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index spiking by 4.4% to a record closing high. Telecom stocks displayed significant strength, as reflected by the 2.1% jump by the NYSE Arca North American Telecom Index. The index also reached a record closing high. Software, networking and biotechnology stocks saw notable strength, contributing to the advance by the tech-heavy Nasdaq while real estate and housing stocks moved to the downside.

Asia-Pacific stocks moved mostly higher. Japan's Nikkei 225 Index surged by 1.7%, while South Korea's Kospi advanced by 0.9%. The major European markets also moved to the upside on the day while the German DAX Index shot up by 1.2% and the French CAC 40 Index jumped by 1%, the U.K.'s FTSE 100 Index inched up by 0.1%.

In the bond market, treasuries recovered from an early pullback to end day roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down less than a basis point to 4.24% after reaching a high of 4.27%.

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