U.S. equities opened sharply higher, extending gains from the previous session. The Dow Jones Industrial Average jumped 460 points, or 0.9 percent, while the S&P 500 rose 0.7 percent. The Nasdaq Composite climbed 0.9 percent, led by strength in large-cap technology stocks.
Markets had already rebounded strongly on Wednesday following their steepest drop since October, as fears over escalating international disputes began to ease. Thursday’s rally added to that momentum, with traders encouraged by data suggesting the labor market and economic growth remain on solid footing.
Investors turn attention to Fed meeting and economic signals
With the Federal Reserve set to meet next week, investors are closely watching indicators that could influence the central bank’s next move on interest rates. Markets largely expect policymakers to leave rates unchanged, despite continued pressure from the White House to push borrowing costs lower.
New labor data released Thursday showed initial jobless claims rose by just 1,000 to 200,000 for the week ending January 17, well below forecasts calling for 210,000. The figures suggest hiring remains steady and layoffs are still limited, reinforcing the view that the labor market remains healthy.
Economic growth data also surprised to the upside. Third-quarter gross domestic product expanded at a 4.4 percent annualized pace, exceeding expectations and marking a notable jump from the prior quarter’s 3.8 percent growth.
Attention is now shifting to upcoming inflation data, particularly the core personal consumption expenditures index, the Federal Reserve’s preferred inflation gauge. Investors see the report as critical for clues on whether rate cuts could still be on the table later this year.
Greenland framework calms geopolitical nerves
Market sentiment improved further after President Trump announced a framework for discussions with NATO involving Greenland. The move prompted him to withdraw plans for new tariffs on 8 European countries and back away from earlier threats related to the strategically important island.
While details of the proposed agreement remain scarce, Trump said talks are continuing around a “Golden Dome” defense initiative tied to Greenland. His remarks helped ease concerns of a broader diplomatic standoff between the U.S. and its NATO allies.
Analysts described the shift as a relief for markets that had been uneasy about escalating rhetoric. Some noted that investors have grown accustomed to sharp policy threats followed by sudden reversals, a pattern that has shaped recent market behavior.
Earnings season adds mixed signals
Corporate earnings were mixed as reporting season continued. Intel is set to release results after the closing bell, drawing close attention from investors tracking the health of the semiconductor sector.
Elsewhere, shares of Procter & Gamble slipped after the company reported quarterly sales slightly below expectations. Mobileye Global sank following a sharp earnings miss, while McCormick & Company also declined after falling short on profit despite stronger revenue.
On the positive side, Freeport-McMoRan topped profit estimates, benefiting from higher copper prices. Overall, earnings reports so far suggest corporate balance sheets remain relatively strong amid steady economic growth.
Gold and oil retreat from recent highs
Commodities moved lower as risk appetite improved. Gold prices slipped after hitting record levels earlier in the week, as reduced tariff fears weakened demand for safe-haven assets. Oil prices also declined following reports of rising U.S. crude inventories.
With stocks climbing, inflation data ahead, and earnings accelerating next week, markets appear poised for continued volatility as investors weigh optimism about growth against uncertainty around rates and global politics.