US STOCKS-Wall St extends gains on tariff relief, upbeat data

By Sruthi Shankar and Pranav Kashyap

Jan 22 (Reuters) - Wall Street's main indexes continued to push higher on Thursday, inching toward all-time highs, after President Donald Trump softened his tariff threat toward Europe, while a fresh set of economic data reinforced 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," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

Tech stocks were at the forefront of the rally, with Alphabet GOOGL.O, Tesla TSLA.O and Apple AAPL.O all up nearly 1%, while Meta META.O gained 3%.

The communication services sector .SPLRCL jumped 1.4%.

At 10:14 a.m. ET, the Dow Jones Industrial Average .DJI rose 241 points, or 0.49%, to 49,318.83, the S&P 500 .SPX gained 22.15 points, or 0.32%, to 6,897.77 and the Nasdaq Composite .IXIC gained 124.51 points, or 0.54%, to 23,349.3.

ECONOMIC DATA IN SPOTLIGHT

U.S. consumer spending increased solidly in November and October, likely keeping the economy on track for a third straight quarter of strong growth, the personal consumption expenditures index showed.

The data lands ahead of the U.S. central bank's rate decision next week, where it is widely expected to stand pat on interest rates 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.

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 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 5.4% 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 gained 2.2% following its quarterly results. Chipmaker Intel INTC.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 6.2% after Bloomberg News reported the Chinese e-commerce firm is preparing to list its chipmaking arm, T-Head.