Updates to market close

By David French

Jan 21 (Reuters) - All three Wall Street benchmarks closed higher on Wednesday, buoyed by the news that a framework for an agreement on Greenland had been reached, averting the possibility of new U.S. tariffs on European allies.

"We have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region," U.S. President Donald Trump wrote on his Truth Social platform. "Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st."

Wall Street benchmarks had been trading in positive territory at the time of the announcement, but soared in its wake as investors cheered the aversion of a potential new tariff war over the future of Greenland.

"I don't think who owns Greenland has any immediate impact on anything, in terms of economics," said Jason Pride, chief of investment strategy & research at Glenmede.

"What the economic impact is whether we all start imposing tariffs on each other," he added.

According to preliminary data, the Dow Jones Industrial Average rose 588.64 points, or 1.21%, to 49,077.23, the S&P 500 gained 78.76 points, or 1.16%, to 6,875.63 and the Nasdaq Composite gained 270.50 points, or 1.18%, to 23,224.83.

MOMENTUM SWINGS

Before the mid-afternoon Greenland announcement, Wall Street had been broadly positive, as investors responded to the steepest selloff in three months on Tuesday to regain some ground. However, while initial momentum had propelled benchmarks more than 1% higher, this momentum had been ebbing by early afternoon.

While light on details, Trump's announcement allowed markets to focus on underlying strengths within the U.S. economy, including strong earnings from banks.

The latest wave of results from lenders, including some of the largest superregional names, helped send the regional banking index .KRX soaring.

Gainers among the S&P 500 sub-sectors were led by energy .SPNY. It was buoyed by Halliburton HAL.N, which gained after earnings beat estimates, while EQT Corp EQT.N and Expand Energy EXE.O advanced as natural gas prices hit a six-week high on cold weather.

Meanwhile, United Airlines UAL.O rose after the carrier issued an upbeat outlook for the current quarter and the full year. Other airlines benefited from the positive sentiment, with Delta Air Lines DAL.N, American Airlines AAL.O and Southwest LUV.N all gaining.

(Reporting by Sruthi Shankar and Pranav Kashyap in Bengaluru and David French in New York; Additional reporting by Johann M Cherian; Editing by Krishna Chandra Eluri and Shilpi Majumdar)

((sruthi.shankar@thomsonreuters.com;))