Dow closes up 580 points after Trump backs off tariffs over Greenland
U.S. President Donald Trump gives a speech at the World Economic Forum (WEF) on January 21, 2026, in Davos, Switzerland. The annual meeting of political and business leaders comes amid rising tensions between the United States and Europe over a range of issues, including Trump’s vow to acquire Greenland, a semi-autonomous Danish territory. (Photo by Chip Somodevilla/Getty Images)
(NEW YORK) — Stocks closed markedly higher on Wednesday after President Donald Trump backed off of tariff threats over Greenland. The major indexes recovered most of the losses they suffered the day before amid trade tensions centered on the Danish territory.
The Dow Jones Industrial Average climbed 588 points, or 1.2%, while the S&P 500 jumped 1.1%. The tech-heavy Nasdaq increased 1.1%.
U.S. stocks surged on Wednesday afternoon after Trump said he would retract his proposed tariff, which had been set to hit products from seven European Union members, plus the U.K., on Feb. 1.
Earlier in the day, stocks ticked up but remained relatively muted after Trump ruled out use of the military in his push for Greenland during a speech at the World Economic Forum in Davos, Switzerland.
Minutes after the speech, European lawmakers suspended a trade agreement with the United States over Trump’s then-ongoing tariff threats.
The EU and U.S. struck the trade agreement in July, moving to decrease tariffs on European goods and restore stability to the commercial relationship. At the time, European Commission President Ursula von der Leyen said the agreement “creates certainty in uncertain times.”
European officials described Trump’s new round of levies as a threat to Greenland, a self-governing territory of EU-member Denmark.
Under Trump’s plan, eight European nations – including Denmark, France, Germany and the United Kingdom – were set to be slapped with 10% tariffs beginning on Feb. 1. Those levies are set to escalate to 25% on June 1.
Trump issued a social media post around 2:30 p.m. ET in which he announced he was rolling back the tariff threat on account of a “framework” deal with NATO on Greenland.
“This solution, if consummated, will be a great one for the United States of America, and all NATO Nations,” Trump said, adding that further negotiations would be overseen by Vice President JD Vance and Secretary of State Marco Rubio, among others. The president provided no details about the framework deal he announced.
Stocks climbed within minutes of the social media post. Meanwhile, U.S. Treasury yields fell, reversing an uptick a day earlier.
: Federal Reserve Chair Jerome Powell speaks during a press conference following the Federal Open Markets Committee meeting at the Federal Reserve on January 28, 2026 in Washington, (Photo by Kevin Dietsch/Getty Images)
(NEW YORK) — Inflation cooled in January, dropping price increases to their lowest level in nine months and defying fears of a tariff-induced hike in overall costs.
Prices rose 2.4% in January compared to a year earlier, U.S. Bureau of Labor Statistics data on Tuesday showed. The reading came in lower than economists had expected.
Inflation stands at its lowest level since May, but it remains a half-percentage point higher than the Fed’s target rate of 2%.
Affordability remains a concern for many Americans as the political calendar turns closer to election season.
The data arrived days after fresh hiring figures showed stronger-than-expected job growth in January, even though an updated estimate released at the same time indicated a near-paralysis of the labor market last year.
The murky hiring picture marked the latest in a recent series of mixed signals in economic data, which have left observers uncertain about the potential risk posed by elevated inflation alongside sluggish hiring.
Observers closely watched price movements for some household staples, which have faced sharp increases of late.
Coffee prices surged about 18% in January compared to a year earlier, while ground beef prices climbed more than 17% over that span, Bureau of Labor Statistics data showed.
Grocery prices rose at a faster pace than prices overall, climbing 2.9% over the year ending in January, BLS data showed.
Over the past year, hiring has slowed dramatically while inflation has remained elevated, risking an economic double-whammy known as “stagflation.” Those conditions have put the Federal Reserve in a difficult position.
The central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.
The strain on both sides of the Fed’s mandate presents a “challenging situation” for the central bank, Fed Chair Jerome Powell said in December.
The Fed held interest rates steady at its most recent meeting in January, ending a string of three consecutive quarter-point rate cuts.
The benchmark rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
Futures markets expect two quarter-point interest rate cuts this year, forecasting the first in June and a second in the fall, according to the CME FedWatch Tool, a measure of market sentiment.
U.S. President Donald Trump listens during a ceremony for the presentation of the Mexican Border Defense Medal in the Oval Office of the White House on December 15, 2025, in Washington, DC. (Photo by Anna Moneymaker/Getty Images)
(WASHINGTON) — President Donald Trump this week issued an attention-grabbing proposal cracking down on Wall Street in an effort to lower home prices and ease affordability woes.
In a social media post, Trump said he would move to ban large institutional investors from “buying more single-family homes” and he urged Congress to codify the policy into law. Trump accused industry behemoths of buying up properties and shutting average Americans out of the housing market.
“People live in homes, not corporations,” Trump said in the post on Wednesday.
Several analysts who spoke to ABC News are skeptical that the proposal would meaningfully reduce home prices nationwide.
Institutional investors own a small fraction of single-family homes and many of those properties are occupied by renters, they said, meaning the ban would do little to address the supply shortage at the root of the affordability crisis.
“In the scheme of things, we’re talking about such a small number of homes,” Marc Norman, associate dean at the New York University School of Professional Studies and Schack Institute of Real Estate, told ABC News.
The median price of an existing home in November stood at $409,200, the National Association of Realtors, or NAR, said last month. Prices have surged 24% over the past five years, according to NAR data.
The average rate on a 30-year fixed mortgage is 6.16%, hovering near its lowest level in 15 months, Freddie Mac data showed. But mortgage rates remain well above sub-3% levels recorded as recently as 2021.
Trump aims to address sky-high prices by shutting institutional investors out of the market for single-family homes, which in theory could alleviate the supply-demand crunch and put downward pressure on prices.
“I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it,” Trump said in a social media post.
Trump did not detail the steps he planned on taking to move forward with the ban. The White House did not immediately respond to ABC News’ request for comment.
On Wednesday, Sen. Bernie Moreno, R-Ohio, said in a post on X he would introduce legislation meant to codify the proposal.
Congress has previously put forward bills aimed at limiting the role of institutional investors in the market for single-family homes. In 2023, Democratic members of the House and Senate introduced a bill that would have imposed an excise tax on hedge funds that own a large number of single-family residences.
Shares of some major industry players fell in the immediate aftermath of Trump’s announcement. Blackstone, Invitation Homes and American Homes for Rent saw their stock prices fall between 4% and 6% on Wednesday.
The National Rental Home Council, or NRHC, a trade group working on behalf of the single-family rental home industry, issued a statement commending “the administration’s focus on ensuring Americans have access to a diverse mix of housing options.”
“We look forward to engaging with the White House and other policymakers in this important discussion,” the NRHC said.
The snag, these analysts said, is that institutional investors do not hold a big slice of the market.
Institutional investors own about 450,000 homes, which amounts to roughly 3% of the single-family market, the U.S. Government Accountability Office, or GAO, found in a study last year that analyzed data from 2022.
“The big question here is: Are large-scale institutional investors crowding out prospective homebuyers?” Jake Krimmel, senior economist at realtor.com, told ABC News Live. “The answer is ‘no.’”
Institutional ownership is concentrated in some regions, particularly in the Sun Belt, according to the GAO.
Institutions own 21% of homes in Jacksonville, Florida, and 18% of homes in Charlotte, North Carolina, the GAO found. In Atlanta, institutions own 1 out of 4 homes.
Analysts who spoke to ABC News disagreed about whether the ban on institutional ownership could lower prices in those highly concentrated markets.
Some said the elimination of a key source of demand could push down prices, while others cautioned the move would likely have little effect in those places, since an injection of new supply has already helped ease price pressures in many of those areas.
“In some select markets, this will have some bite,” Stijn Van Nieuwerburgh, a professor of real estate at Columbia University Business School, told ABC News. “Overall, it’s not such a big deal.”
U.S. Federal Reserve Chair Jerome Powell. (Li Yuanqing/Xinhua via Getty Images)
(NEW YORK) — An inflation report on Tuesday is set to provide a key gauge of the nation’s economy, just days after reports of a Department of Justice probe into Federal Reserve Chair Jerome Powell brought fresh scrutiny to the independence of the central bank and its capacity to manage price increases.
Economists expect year-over-year inflation to have been left unchanged at 2.7% in December. Inflation stands at its lowest level since July, but it remains nearly a percentage point higher than the Fed’s target rate of 2%, according to the U.S. Bureau of Labor Statistics.
Prices for some high-profile items like coffee and beef continue to soar.
Coffee prices jumped nearly 19% year-over-year in November, the most recent month for which data is available. Beef prices climbed almost 16% over that span. Egg prices plummeted in November, however, falling 13% compared to the previous year.
The onset of elevated inflation alongside sluggish hiring in recent months had put the Fed in a difficult position, even before the DOJ opened a probe into Powell.
The central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.
The Fed cut interest rates at three consecutive meetings late last year in an effort to boost the flagging labor market. Still, borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
The criminal probe into Powell appears to center on allegations of false testimony he made about cost overruns in a renovation of the Fed’s headquarters during a congressional hearing in June.
Powell, who was appointed by Trump in 2017, issued a rare video message on Sunday night rebuking the investigation as a politically motivated effort to influence the Fed’s interest rate policy.
A bipartisan group of economists and former top Fed officials on Monday issued a joint statement condemning the probe as an attempt to undermine the Fed’s political independence.
The investigation follows months of strident criticism leveled at the Fed by President Donald Trump, who has urged the central bank to significantly reduce interest rates. Trump denied any involvement in the criminal investigation during a brief interview with NBC News on Sunday night.
In a statement to ABC News, a spokesperson for Attorney General Pam Bondi said, “The Attorney General has instructed her U.S. Attorneys to prioritize investigating any abuse of taxpayer dollars.”
A longstanding norm of independence usually insulates the Fed from direct political interference.
In the event a central bank lacks independence, policymakers tend to favor lower interest rates as a means of boosting short-term economic activity, analysts previously told ABC News. But, they added, that posture poses a major risk in the possibility of years-long inflation fueled by a rise in consumer demand, untethered by interest rates.
Stocks closed higher on Monday, shrugging off a dip earlier in the day after reports of the DOJ probe into Powell.
Treasury yields, however, also ticked up on Monday, suggesting possible concern about the Fed’s ability to constrain inflation.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks devaluing the asset and, in turn, makes bonds less attractive. When bond prices fall due to a drop in demand for Treasuries, bond yields rise.
