Wolves have been without a substantive boss since sacking Bruno Lage at the start of October.
Queens Park Rangers boss Michael Beale became the latest manager to turn down Wolves on Thursday after former Sevilla boss Julen Looetegui also declined an offer to move to the Molineux Stadium.
Wolves have also spoken to former boss Nuno Esperito Santo about making a return and ex Borussia Dortmund and Ajax Amsterdam manager Peter Bosz has also been linked with the role.
Davis has led Wolves to one win and two defeats since taking over the mantle from Lage but the club still find themselves in the relegation zone.
In a statement on the club's official website, chairman Jeff Shi said: "In the short time Steve and his team have been in interim charge of the first-team, we have already seen improvements to the group.
"We have no plans to rush our search for a new permanent head coach and will not compromise in any way our approach to appointing the person we believe to be the perfect fit for our club, our squad and the role of head coach at Wolves."
Wolves' next game is against fellow strugglers Leicester City this weekend.
