US STOCKS-Wall St set to extend gains on tariff relief; data in focus

By Sruthi Shankar and Pranav Kashyap

Jan 22 (Reuters) - Wall Street's main indexes were set to extend gains on Thursday after U.S. President Donald Trump dialed back his threat of tariffs on European countries, while fresh data pointed to a resilient U.S. economy.

The main U.S. indexes rebounded on Wednesday, with the benchmark S&P 500 .SPX posting its biggest one-day percentage gain in two months, after Trump stepped back from imposing tariffs as leverage to seize Greenland, suggesting instead that a deal was in sight to end a dispute over the Danish territory.

Trump's tariff threats had sent shivers through global markets on Tuesday, though buyers quickly returned to stock markets following his U-turn.

The CBOE Volatility Index, also known as Wall Street's fear gauge, slid further from a two-month peak touched on Tuesday.

"The selloff that we saw had nothing to do with the Sell America trade. It has more to do with increased hedging by non-U.S. investors holding a record amount of U.S. securities," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

"Investors are selling their U.S. assets because they're simply taking an insurance policy against more policy uncertainty on trade. Now it has stabilized."

By 8:38 a.m. ET, S&P 500 e-minis EScv1 rose 40.25 points, or 0.60%, Nasdaq 100 e-minis NQcv1 climbed 232.75 points, or 0.91%, and Dow e-minis YMcv1 added 201 points, or 0.41%.

ECONOMIC DATA IN SPOTLIGHT

Data showed initial claims for state unemployment benefits increased less than expected last week, suggesting the labor market maintained a steady pace of job growth in January. Meanwhile, the U.S. economy grew by a slightly more-than-expected 4.4% in the third quarter of 2025, a final estimate showed.

The personal consumption expenditures index - the Federal Reserve's favored inflation gauge - is due at 10:00 a.m. ET.

The U.S. central bank is widely expected to stand pat on interest rates next week amid still‑sticky inflation and evidence of economic resilience.

Traders are also weighing uncertainty over who Trump will choose to lead the central bank next. He renewed his criticism of Chair Jerome Powell on Wednesday for not cutting rates more aggressively and said a decision on the next Fed chief will come soon.

The earnings season is picking up pace, and could test market sentiment as companies detail how consumer demand, cost pressures and a bumpy macro backdrop shaped their year-end performance.

GE Aerospace GE.N slipped 4% in premarket trading despite forecasting its annual profit above estimates, while Abbott ABT.N slid 6.9% after the medical device maker forecast current-quarter profit below Wall Street expectations.

Procter & Gamble PG.N slipped 0.7% as its quarterly revenue fell just short of expectations.

Chipmaker Intel O, up 47% so far this year, is expected to post results after the bell.

U.S.-listed shares of Alibaba Holdings BABA.N rose 4% after Bloomberg News reported the Chinese e-commerce firm is preparing to list its chipmaking arm, T-Head.