Stocks soar 10% in a stunning rally after Trump pauses trade war
US stocks staged a stunning rally after President Trump announced a 90-day tariff pause
The Dow Jones gained almost 3,000 points, while the Nasdaq rallied 12%
While Trump said he would pause tariffs for some countries, he said he would increase China's tariff rate to 125%.
He got the message.
After cratering for days amid extreme volatility brought on by the trade war, US stocks staged the biggest rally in years on Wednesday after President Trump announced a 90-day tariff pause for some countries.
The S&P 500 soared as much as 9%. It was the biggest gain for the benchmark index since 2008.
The Dow surged by almost 3,000 points, and the Nasdaq Composite rallied 12% for its best day since 2001 and its second-largest increase ever.
Here's where indexes stood at the 4:00 p.m. ET. closing bell on Wednesday:
S&P 500: 5,456.68, up 9.5%
Dow Jones Industrial Average: 40,607.46, up 7.87% (+2961.87 points)
Nasdaq composite: 17,124.97, up 12.1%
"I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately," Trump said in a post to Truth Social.
In the week since he unveiled sweeping tariffs, Trump has faced mounting backlash from billionaires, companies, and investors, all while insisting that the market crash was akin to taking medicine.
Now, the president seems to be responding to the deep fears that his trade war has drummed up, with top voices like Jamie Dimon and big backers like Bill Ackman sounding the alarm on the potential damage to the economy
Investors were jubilant.
"This is the pivotal moment we've been waiting for. The immediate market reaction has been overwhelmingly positive, as investors interpret this as a step toward much-needed clarity. The timing couldn't be better, coinciding with the start of earnings season," said Gina Bolvin, President of Bolvin Wealth Management Group.
"This pause may provide companies with a clearer backdrop for their guidance, offering some relief to a market hungry for direction."
However, the trade war isn't paused for everyone. Trump said he was raising the tariff rate on China to 125% from 104% due to a "lack of respect."
According to Mark Hamrick, senior economic analyst at Bankrate, the focus has shifted to trade deals.
"Something akin to a worst-case scenario has been delayed, if not averted," Hamrick said in an e-mail to BI. "Now, the focus turns to what happens with scores of countries including China."
The big takeaway, according to Hamrick, is that fears of an imminent recession and spike in inflation can be "dialed down a bit."
The sudden pause in Trump's trade war also caused recession forecasts to whipsaw. After ramping up its call for a downturn,
Investors are buying first and asking questions later. These were some of the biggest movers within the S&P 500.
United Airlines: +28%
Microchip Technology: +28%
Delta Air Lines: +25%
ON Semiconductor: +21%
Advanced Micro Devices: +23%
Tesla: +22%
The enormous reversal came amid what had looked to be another day of withering volatility in the stock market as investors navigated trade war uncertainty.
Investors' worries on Wednesday were twofold: that the trade war was showing no signs of de-escalating and the bond market was showing signs of intense stress.
China and The European Union each announced retaliatory tariffs, ratcheting up tensions with the US.
Meanwhile, Treasury bond yields surged, with the 10-year reaching an intraday high of 4.51%. The 10-year US Treasury yield is up nearly 50 basis points since last week.
Bank of America said the surge in Treasury yields served as a "confidence test" for investors, as concerns about higher inflation and a potential deficit spike linger.
Read the original article on Business Insider
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