Stocks skyrocket after Trump pauses tariffs
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A TV broadcasts market news as a trader works on the floor of the New York Stock Exchange (NYSE) on April 9. Photo: Michael Nagle/Bloomberg via Getty Images
Stocks skyrocketed Wednesday afternoon after President Trump announced a pause on most tariffs.
Why it matters: The market had been on a stretcher since Trump announced reciprocal tariffs on nearly all foreign countries last week, bringing the S&P 500 to the brink of a 20% bear-market fall in a little over a month.
Between the lines: Wednesday's blistering rally was all-encompassing:
- The Dow soared nearly 8%, topping 40,000 points again.
- The S&P 500 index ballooned by more than 9%, with nine stocks up more than 16% and only three down more than 2%.
- The tech-heavy Nasdaq closed up 12%, it's biggest one-day gain in 24 years.
- The reaction in the bond market was more muted, however. Yields on 10-year Treasuries slipped following the announcement but remained higher on the day at 4.35%.
Zoom in: Trump announced Wednesday afternoon he would pause reciprocal tariff hikes on all countries that haven't retaliated.
- China is the exception, and will get an increase in tariffs to 125% after it responded with higher duties on American products.
- Baseline global tariffs of 10% will remain in place.
Trump said in a press conference that his strategy of imposing tariffs to force countries to come to the table had worked.
- "A deal's going to be made with China. A deal's going to be made with every one of them," Trump said, adding that he urged people to "be cool" for a reason.
Follow the money: "Although President Donald Trump was able to resist the stock market sell-off, once the bond market began to weaken too, it was only a matter of time before he folded on his eye-wateringly high tariffs," Capital Economic chief North America economist Paul Ashworth writes.
Reality check: Stocks are still down for the year, with the S&P 500 off 8%, as investors fear the possibility of a recession.
- And even with Wednesday's rally, the S&P 500 was still down over 4% from where it closed on April 2, before Trump announced the specific tariff rates from the Rose Garden.
- "I empathize with those who sold out yesterday and are now watching the rebound from the sidelines," Bolvin Wealth Management Group president Gina Bolvin writes. "This underscores the importance of staying fully invested, particularly in a market as reactive and headline-driven as this one."
What's next: The Trump administration will negotiate "bespoke" trade deals with the more than 75 countries that have offered to make a deal, Treasury Secretary Scott Bessent said.
- "Our working assumption now will be that, cowed by the market response, Trump will repeatedly extend the "pause" meaning that this will end up looking a lot like the 10% universal tariff that he campaigned on," Ashworth said.
