Stocks rose Thursday as the broad market rally induced by easing geopolitical tensions extended into another session.
The Dow Jones Industrial Average (NYSE: DIA) climbed 300 points to settle at 49,384.01, while the S&P 500 Index (NYSE: SPY) added about 0.6% and the Nasdaq Composite (NASDAQ: QQQ) rose nearly 1% to end the day at 6,913.35 and 23,436.02, respectively. The session's gains led the Dow to recover from losses suffered earlier in the week. Still, all three major averages were off their session highs -- the Dow rose over 500 points earlier on Thursday, while the S&P 500 and Nasdaq were each about 1% higher.
Stocks rose on Wednesday after President Donald Trump said that he would no longer impose fresh tariffs on several European countries and does not plan to use force to acquire Greenland, of which the president said relevant parties are reaching a deal "framework" in a speech at the World Economic Forum in Davos, Switzerland. All three major market averages rose more than 1% on Wednesday in a broad market rally on the news.
Trump's comments helped alleviate extreme volatility risk, according to Evercore ISI Senior Managing Director Julian Emanuel. Instead, market participants are now turning their attention back to Wall Street's regular schedule of Federal Reserve policy meetings and upcoming earnings reports for clues on stock outlooks.
"The phrase 'No use of force' removed the 'left tail outcome' ... and his Truth Social post that the 'Framework of a Future Deal' was being forged with NATO's Rutte while the 2/1 Tariffs were called off further underpinned risk assets," Emanuel wrote in a Thursday note to clients.
Wednesday's rally highlighted the continued strength of retail investors on Wall Street as well, according to Arun Jain, head of U.S. equity quantitative strategy at JPMorgan.
"As geopolitical developments cast fresh uncertainty over market sentiment this Tuesday, retail investors responded by stepping in strongly to buy the dip," Jain wrote in a Thursday note to clients.
In economic news, the latest inflation reading came in-line with estimates from Dow Jones, the Commerce Department reported on Thursday. The agency's personal consumption expenditures (PCE) price index rose 2.8% in November on both a headline and core (removing food and energy prices) basis for the the month. This reading supports investors' view that the Fed will hold interest rates steady at its upcoming policy meeting next week following three consecutive cuts in 2025.
For Friday, investors will turn their attention towards Intel's (NASDAQ: INTC) earnings report for insight on the state of the semiconductor industry.