Wall Street closed sharply higher on Wednesday, pulled up by energy stocks and a broad-based rally. Investors were optimistic over a Greenland agreement framework and easing concerns about new U.S. tariffs on European allies. All three benchmark indexes finished firmly in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 1.2%, or 588.64 points, to close at 49,077.23. Twenty-four components of the 30-stock index ended in positive territory, while six ended in the negative.
The tech-heavy Nasdaq Composite rose 270.5 points, or 1.2%, to close at 23,224.83.
The S&P 500 added 1.2%, or 78.76 points, to close at 6,875.62. All 11 broad sectors of the benchmark index closed in the green. The Energy Select Sector SPDR (XLE), the Materials Select Sector SPDR (XLB) and the Health Select Sector SPDR (XLV) rose 2.4%, 1.9% and 1.8%, respectively.
The fear gauge CBOE Volatility Index (VIX) decreased 15.9% to 16.9.
Wall Street Rallies on Greenland Deal Hopes, Davos Signals and Trump Comments
Wall Street witnessed a broad-based rally on Wednesday as investors were encouraged by easing geopolitical and trade concerns. Optimism grew on the news that a framework for an agreement on Greenland had been reached, an issue discussed alongside broader diplomatic efforts at the World Economic Forum in Davos.
Market sentiment was further supported by indications that the threat of new U.S. tariffs on European allies had been averted, easing fears of renewed trade friction. Investor confidence also benefited from comments linked to President Donald Trump, which were interpreted as signaling a willingness to avoid escalating disputes with key partners. “Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region,” President Trump wrote on his social media platform. “Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st.”
Discussions and meetings at Davos reinforced hopes that major economies are prioritizing dialogue and stability, helping shift focus away from geopolitical risks. Together, these factors lifted risk appetite and supported gains across U.S. equities, with investors responding positively to signs of cooperation and reduced policy uncertainty.
The Energy Sector on Wall Street Leads the Charge
Oil prices ended Wednesday higher, supported by optimism over tighter supply following a temporary shutdown at two major oil fields in Kazakhstan. Signs of constrained Venezuelan exports also aided, underscoring slow progress in restoring output in the South American nation. Brent crude settled up 32 cents, or 0.5%, at $65.24/barrel, while WTI crude gained 26 cents, or 0.4%, to finish at $60.62/barrel. Natural gas prices also jumped after forecasts of a severe Arctic cold wave lifted expectations for heating demand and raised concerns about potential freeze-offs and tighter U.S. supply.
Consequently, shares of Range Resources Corporation RRC and Diamondback Energy, Inc. FANG rose 3.8% and 2.9%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The U.S. Census Bureau reported that construction spending had decreased 0.6% in September. The number for August was revised down to an increase of 0.2% from the previously reported 0.4%.
Per the National Association of Realtors, pending home sales for December fell 9.3% after rising 3.3% in November.
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Range Resources Corporation (RRC): Free Stock Analysis Report Diamondback Energy, Inc. (FANG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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