Major U.S. stock indices closed solidly higher on Thursday for a second consecutive session, supported by improving investor sentiment after President Donald Trump moved to ease tensions with European allies by reversing his earlier tariff threats linked to the Greenland dispute.

The tech-heavy Nasdaq Composite gained around 0.9%, while the Dow Jones Industrial Average rose 0.6%, adding more than 300 points. The S&P 500 also advanced 0.6%.

The rally followed gains of nearly 1.2% in Wednesday’s session, when markets rebounded from their worst daily performance since October 10.

Investor confidence improved after Trump, speaking at the World Economic Forum in Davos, ruled out the use of military force in Greenland. He later confirmed on his Truth Social platform that tariffs scheduled to be imposed on eight NATO countries from February 1 would not go ahead.

On the economic front, data from the Personal Consumption Expenditures Price Index — the Federal Reserve’s preferred inflation gauge — came in broadly in line with expectations. The index showed a monthly increase of 0.2% and an annual rise of 2.8%.

The data had a limited impact on monetary policy expectations; however, as the Bureau of Economic Analysis typically releases December figures at this point in the year, reducing their influence on near-term rate decisions.

In the bond market, the yield on the 10-year U.S. Treasury settled at 4.25%, little changed from Wednesday, after reaching its highest closing level since August 21 at 4.30% earlier in the week.

In commodities and currencies, gold futures extended their rally, surging to a fresh record above $4,930 an ounce as safe-haven demand remained strong. By contrast, Bitcoin traded slightly lower near the $89,500 level, while the U.S. dollar index fell 0.5% to 98.30.

Oil prices weakened, with West Texas Intermediate crude sliding more than 2% to $59.35 a barrel.

At the stock level, Intel shares edged up 0.1% after recovering from early losses ahead of its earnings release after the market close, following a near 12% surge in the previous session. Shares of the so-called “Great Seven” technology companies all finished higher, led by Meta Platforms, which jumped 5.7%.

In post-earnings trading, Abbott Laboratories, McCormick, and GE Aerospace recorded sharp declines of more than 10%, 8%, and 7%, respectively, while Procter & Gamble shares rose over 2.5%.

Market Outlook

Global markets may see modest gains in equities in the near term, while the U.S. dollar could remain under pressure as strong safe-haven demand continues to support gold prices.

Gold is likely to stay elevated if concerns around global growth or renewed political tensions resurface. Meanwhile, investors will closely watch U.S. interest rate expectations ahead of the Federal Reserve’s upcoming meeting on January 27–28, as any shift in inflation guidance or rate projections could influence stocks, bonds, and currency markets.

Global investors are unwinding dollar positions as Trump’s tariff-driven policies, record debt levels, and attacks on Federal Reserve independence rattle confidence. 

The S&P 500 alone lost $5 trillion in market value after April’s tariff announcement, while US Treasuries saw selloffs that pushed yields higher. Though Trump paused some tariffs, lingering uncertainty has crushed demand for dollar-linked assets. 

The OECD slashed US growth forecasts to 1.6% as inflation cooled to 2.3%, down from 3% earlier this year. Meanwhile, gold surged to record highs on central bank demand, reflecting fears over dollar devaluation. 

Trump’s pending One Big Beautiful Bill Act, which aims to extend tax cuts and lift the $36.2 trillion debt ceiling, is raising alarms. Experts project it will balloon US debt by $3.3 trillion by 2034, pushing the debt-to-GDP ratio beyond 124%. Markets are now pricing in two or three Fed rate cuts before year-end to support growth. 

What Does This Mean for Me?

Meanwhile, The euro has climbed 13% to $1.17, while European stocks are up 15%, delivering 23% gains for dollar investors after currency conversion. 

Commodities are also benefiting, with weaker dollar dynamics boosting prices for exporters like Nigeria, Chile, and Indonesia. 

While the dollar’s reserve status remains intact for now, backed by its 57% share of global reserves, investors are clearly diversifying, and more dollar weakness looks inevitable this year.

Trump, who has clashed with Powell over interest rate policy, is reportedly considering unveiling his successor as early as September, far ahead of the usual timeline. 

Powell’s term runs for another 11 months, but frustration from the White House over the Fed’s reluctance to lower rates has fuelled speculation of an early move.

The dollar dropped 0.5% against a basket of major currencies, marking its weakest level since March 2022. Markets are on edge, concerned that an early nomination could shake confidence in the Fed’s independence and increase political pressure on monetary policy. 

Trump has been vocal in demanding rate cuts to counter the economic fallout from his tariff policies, which have already pushed inflation projections higher.

What Does This Mean for Me?

Any potential successor will surely be more in step with Trump’s policies, but will also raise questions about the Fed’s ability to act independently in the final stretch of Powell’s leadership. 

The Fed kept rates unchanged in June, citing uncertainty around tariffs, inflation risks, and political intervention as key factors. With the dollar under pressure and traders watching for the next policy shift, the Fed’s credibility hangs in the balance as Trump looks to reshape the central bank’s leadership.

While traditional bots simply executed predefined strategies, today’s AI-powered trading agents can autonomously learn from market behaviour, synthesise large volumes of data in real time, and adapt without human intervention. 

This shift raises critical concerns about market manipulation, especially as bots begin to operate in coordinated ways without explicit instructions.

One plausible scenario involves AI bots amplifying financial narratives across social media. These bots don't fabricate stories, but selectively boost existing news, prompting real investors to react and unknowingly drive up asset prices. 

Meanwhile, trading bots aligned with the initial narrative profit from early positions, even if the human users behind them are unaware of the orchestration. Such behaviour skirts traditional definitions of insider trading, making enforcement far more complex.

Regulators like ESMA warn that AI-driven manipulation is a realistic concern, exacerbated by the rapid spread of misleading narratives and the opaque nature of AI decision-making.

What Does This Mean for Me?

Complicating matters, collaboration between bots doesn’t resemble human collusion. There are no messages or meetings, just algorithmic pattern recognition. Experts argue for AI-specific safeguards, such as built-in circuit breakers, to halt trading before manipulative behaviorescalates. Others call for liability frameworks that assign responsibility to AI developers, even when manipulation occurs without intent.

The stakes are growing. While interest rates, inflation, and macro data still move markets, the rise of autonomous agents introduces a fast-moving, unpredictable force. Regulation, still stuck in human logic, is struggling to keep pace.