President Donald Trump announced a 90-day pause on certain tariffs, with the exception of those on China. This led to a historic rally on Wall Street, with the Dow Jones Industrial Average skyrocketing 2,963 points, or 7.87%. The S&P 500 shot up 9.52%, posting its best day since October 2008.
The tech-heavy Nasdaq soared 12.16%, having its second-best day in history. Chris Brigati, chief investment officer at SWBC, said, “The market’s move upward is violent and speaks to how badly the market was looking for clarity on this issue.”
Nearly every single company in the S&P 500 rose. Amazon rose 11.98%, Nike gained 11.36%, and Delta Air Lines surged 23.38%.
On the Nasdaq, Apple surged 15.33%, Nvidia rose 18.72%, and Tesla surged 22.69%. Despite the surge, the S&P 500 is still down more than 3.7% from its close on April 2, right before Trump initially announced his “reciprocal” tariffs. The Nasdaq is still 2.7% down from its close on April 2.
Trump escalated the trade war with China by raising its tariff rates to 125% from 104%.
Trump’s tariff pause boosts markets
Additionally, universal duties of 10% remain on all US imports alongside targeted, sectoral tariffs on autos.
Jamie Cox, managing partner at Harris Financial Group, said, “Trump illustrated to everyone in the market today how incredibly difficult it is to trade around his tariff regime because he and only he knows when it ends.”
Trump posted on his social media platform Truth Social: “BE COOL!” and “This is a great time to buy!!!” He declined to say if the markets prompted his reversal on tariffs, stating, “The markets right now are extremely good.”
Earlier in the day, global markets had fallen in response to China’s significant retaliation and the European Union’s countermeasures against Trump’s reciprocal tariffs. Japan’s Nikkei index closed 4% down, while Hong Kong’s Hang Seng finished marginally higher. South Korea’s Kospi index headed into bear market territory.
Oil prices reversed course and gained on Wednesday after initial declines. US oil gained 4.65% to $62.35 a barrel, while global benchmark Brent crude gained 4.23% to $65.48 a barrel. Investors have poured money into traditional safe-havens, like gold, which saw prices rise more than 3%.
However, US Treasury yields have risen in recent days as investors have sold off bonds. Trump suggested that the volatility in the bond market was among the factors that led to his decision to institute a 90-day pause on some tariffs. Deutsche Bank analysts warned that the mass exodus from Treasury bonds might signal weakening demand for US-backed assets.
The market’s reaction underscores the delicate balance that investors must navigate in the face of ongoing trade tensions and economic uncertainties.
