Trump’s tariff pause triggers stock rally

President Donald Trump announced a 90-day pause on some tariffs, excluding those on China. This led to a historic rally in the US stock market on Wednesday. The Dow Jones Industrial Average climbed 2,963 points, or 7.87%. The S&P 500 soared 9.52%, marking its best day since October 2008. The tech-heavy Nasdaq saw an impressive rise of 12.16%, experiencing its best day since January 2001. Chris Brigati, chief investment officer at SWBC, noted, “The market’s move upward is violent, and speaks to how badly the market was looking for clarity on this issue.” Almost every company in the S&P 500 saw an increase. Amazon gained 11.98%, Nike rose 11.36%, and United Airlines surged 26.14%. On the Nasdaq, Apple surged 15.33%, Nvidia rose 18.72%, Palantir gained 19%, and Tesla climbed 22.69%. Despite this surge, the S&P 500 remains down more than 3.7% from its close on April 2, just before Trump announced the tariffs. The Nasdaq is still 2.7% down from its close on the same date. The rally came amid ongoing uncertainty as Trump continued to escalate the trade war with China, raising tariffs to 125% from 104%.

Trump’s tariff pause boosts stocks

Universal duties of 10% remain on all US imports alongside targeted sectoral tariffs on autos. Earlier in the day, global markets had fallen. Japan’s Nikkei index closed down 4%, and South Korea’s Kospi index fell into bear market territory. In Europe, the STOXX 600 index fell by 3.5%. US oil prices reversed course, with US oil gaining 4.65% to $62.35 a barrel after initially tumbling. Brent crude rose 4.23% to $65.48 a barrel. Bond markets showed unusual behavior. US Treasury yields rose despite investors traditionally flocking to bonds in times of uncertainty. The benchmark 10-year yield rose above 4.3% after Trump’s announcement. Trump indicated that the volatility in the bond market was a factor in his decision for the tariff pause. The market displayed significant volatility, impacting stocks, bonds, and commodities, underlining the complexities of the current trade landscape. Image Credits: Photo by taro ohtani on Unsplash