What Happened?
A number of stocks jumped in the afternoon session after President Trump cooled fears of a transatlantic trade war by calling off scheduled tariffs on European allies.
The rally followed a productive meeting in Davos with NATO Secretary General Mark Rutte, where a "framework of a future deal" regarding Greenland and the Arctic region was established. By explicitly ruling out the use of military force and suspending the 10% tariffs previously set for February 1st, the administration provided the "sigh of relief" the market desperately needed after Tuesday's sharp sell-off. Technology and semiconductor leaders like Nvidia and AMD spearheaded the recovery as investors quickly pivoted back into growth stocks.
The "Sell America" trade from the prior session reversed sharply, with the Nasdaq Composite jumping 1.5% and the S&P 500 erasing its 2026 losses. This rebound was further supported by a stabilization in the bond market; as tariff-related inflation fears subsided, the 10-year Treasury yield retreated from its recent highs, creating a more favorable backdrop for equity valuations across the board.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Online Marketplace company Etsy (NASDAQ: ETSY) jumped 4%. Is now the time to buy Etsy? Access our full analysis report here, it’s free.
- Gig Economy company Upwork (NASDAQ: UPWK) jumped 2.9%. Is now the time to buy Upwork? Access our full analysis report here, it’s free.
- Online Retail company Wayfair (NYSE: W) jumped 2.7%. Is now the time to buy Wayfair? Access our full analysis report here, it’s free.
- Financial Technology company Remitly (NASDAQ: RELY) jumped 2.9%. Is now the time to buy Remitly? Access our full analysis report here, it’s free.
Zooming In On Etsy (ETSY)
Etsy’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 3.1% on the news that the U.S. announced potential tariffs on several European countries.
The sell-off was a reaction to news that the White House planned to impose a 10% tariff on imports from eight European nations, including France, Germany, and the United Kingdom, starting February 1. Reports indicated the tariffs were intended to pressure Denmark over the potential sale of Greenland to the U.S. and could rise to 25% if a deal was not reached. The announcement caused a significant downturn in U.S. stocks, with the S&P 500 and Dow Jones falling more than 1.4% as investors returned from a holiday weekend and reacted to the heightened trade uncertainty. The downturn was further exacerbated by a spike in Treasury yields. Higher rates particularly hurt growth stocks such as tech names since investors must discount financials further out in the future back to the present.
Etsy is up 6.5% since the beginning of the year, but at $60.99 per share, it is still trading 19.3% below its 52-week high of $75.56 from October 2025. Investors who bought $1,000 worth of Etsy’s shares 5 years ago would now be looking at an investment worth $286.94.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave, it’s free.
