President Donald Trump announced a 90-day pause on some tariffs Wednesday. This marked a big shift in trade policy. US stocks surged after Trump said he authorized a pause on most reciprocal tariffs.
The pause is effective immediately. It does not apply to tariffs targeting China. Wall Street was on edge.
It was looking for any sign of a shift from Trump. The market responded with a historic rally. The Dow jumped 2,963 points (7.87%).
The S&P 500 soared 9.52%. The Nasdaq surged 12.16%. It was the S&P 500’s best day since October 2008.
It was its third-best day since the index’s modern formation in 1957. The Nasdaq also had its best day since January 2001. The Dow had its best day in five years.
“The market’s move upward is violent. It speaks to how badly the market was looking for clarity on this issue,” said Chris Brigati. Brigati is chief investment officer at SWBC in San Antonio, Texas.
Nearly every single company in the S&P 500 saw gains. Notable increases came from Amazon (11.98%), Nike (11.36%), United Airlines (26.14%), Delta Air Lines (23.38%), American Airlines (22.6%), Apple (15.33%), Nvidia (18.72%), Palantir (19%), and Tesla (22.69%). Uncertainty remains as Trump escalates the trade war with China.
He raised tariffs on China to 125% from 104%. Universal duties of 10% on all US imports also remain in place. Sectoral tariffs on autos are still there too.
“Trump illustrated how incredibly difficult it is to trade around his tariff regime. Only he knows when it ends,” said Jamie Cox. Cox is managing partner at Harris Financial Group.
Markets initially had a mixed start to the day. This was after China announced major retaliation. The European Union also announced countermeasures against Trump’s tariffs.
Stocks surge after Trump’s tariff pause
Markets then surged after Trump’s announcement. He said all countries subjected to reciprocal tariff rates would see rates reduced to 10%.
This does not apply to China. Global financial markets experienced volatility. Japan’s Nikkei index closed 4% down.
Hong Kong’s Hang Seng finished slightly higher. South Korea’s Kospi index dipped into bear market territory. European markets also fell.
The STOXX 600 was down 3.5%. France’s CAC fell 3.34%. Germany’s DAX dropped 3%.
London’s FTSE 100 declined 2.92%. US oil reversed losses. It gained 4.65% to $62.35 a barrel after hitting a low of $57.
Brent crude rose 4.23% to $65.48 a barrel. It had briefly fallen below $60. Investors also bought traditional safe-havens like gold.
Gold spot prices rose more than 3%. US Treasury yields rose, showing a sell-off in bonds. The 10-year yield climbed above 4.3%.
It had fallen below 4% earlier in the week. Bonds yield and prices move in opposite directions. Trump said he was watching the bond market volatility.
This was one of the factors influencing his tariff policy reversal. Deutsche Bank analysts said the shift in Treasury bonds may suggest weakening demand for US assets. This reflects worries about America’s position in the trade war.
JPMorgan CEO Jamie Dimon warned of potential impacts on the US economy. This could happen if foreign governments sell off their huge Treasury holdings. As global markets react, US stocks have bounced back significantly.
But underlying uncertainties remain about the future of US-China trade relations and overall economic stability.
