US open: Stocks higher as Trump drops EU tariff plan, investors digest PCE reading

(Sharecast News) - Major indices were in the green early on Thursday after Donald Trump dialled back his rhetoric surrounding Greenland and said he would no longer impose new tariffs on European nations.

As of 1515 GMT, the Dow Jones Industrial Average was up 0.42% at 49,283.95, while the S&P 500 advanced 0.29% to 6,895.63, and the Nasdaq Composite came out of the gate 0.52% firmer at 23,346.19.

The Dow opened 206.72 points higher on Thursday, extending gains recorded in the previous session.

Stocks were higher at the open on Thursday after Trump said he would no longer proceed with new tariffs on European nations that had been scheduled to take effect on 1 February, adding that a "framework" for a deal over Greenland had been reached.

Trump, who has ramped up his push for US control of Greenland in recent weeks, said that he and NATO secretary general Mark Rutte had "formed the framework of a future deal with respect to Greenland". He later said "we have a concept of a deal" regarding the Arctic territory. Stocks had already moved higher earlier in the session after Trump told the World Economic Forum in Davos that he had already ruled out acquiring Greenland by force.

While major indices traded higher on the "framework" announcement, the geopolitical backdrop remained unsettled on Thursday, with Danish prime minister Mette Frederiksen describing Trump's talks with NATO secretary general Mark Rutte on Arctic security as "good and natural". However, she underlined that the Greenland's sovereignty was not up for negotiation.

"The Kingdom of Denmark wishes to continue to engage in a constructive dialogue with allies on how we can strengthen security in the Arctic, including the US's Golden Dome, provided that this is done with respect for our territorial integrity," said Frederiksen.

On the macro front, US consumer spending continued to rise into the autumn, with personal consumption expenditures increasing in both October and November, according to the Bureau of Economic Analysis. The PCE price index, the Federal Reserve's preferred inflation gauge, rose by 0.2% in both October and November, as did core PCE, which strips out volatile food and energy costs. On an annualised basis, headline PCE inflation edged up from 2.7% in October to 2.8% in November, with core PCE following the same pattern.

Elsewhere, a final reading of Q3 US gross domestic product was revised upwards to a two-year high, according to the Bureau of Economic Analysis on Thursday. The annual rate of GDP growth for the June-September quarter was adjusted to 4.4% from the initial reading of 4.3%, surprising economists who had expected no change from the flash estimate. That's up from 3.8% year-on-year growth in the second quarter and a 0.6% decline in the first quarter, marking the strongest rate of economic expansion since the third quarter of 2023.

On another note, Americans lined up for unemployment benefits at an accelerated clip in the week ended 17 January, according to the Labor Department. Initial jobless claims rose by 1,000 to 200,000, up from the previous week's upwardly revised reading, while continuing claims fell by 26,000 to 1.85m. The four-week moving average, which aims to strip out week-to-week volatility, dropped by 3,750 to 201,500 - its lowest level since January 2024.

Still to come, the Kansas Fed's January manufacturing activity index be released at 1600 GMT.

In terms of earnings, consumer goods giant Procter & Gamble Q2 revenues fell just short of quarterly expectations on Thursday, held back by weak consumer spending in core categories, which overshadowed a strong performance in its beauty products division, while aircraft engine supplier GE Aerospace posted its fourth quarter results on Thursday, topping market expectations on both the top and bottom lines, with Q4 adjusted earnings per share of $1.57 and revenues of $11.87bn - exceeding analyst estimates of $1.43 and $11.2bn, respectively.

Intel and Capital One Financial will report earnings after the close.

Reporting by Iain Gilbert at Sharecast.com