A Much-Needed Breather for the Markets
After a week of punishing losses, the stock market came roaring back on Wednesday, sparked by President Donald Trump’s announcement to delay certain tariffs—excluding those on China—for 90 days.
The S&P 500 surged 9.5%, marking its strongest single-day gain since October 28, 2008. The Dow Jones Industrial Average soared 2,962.86 points, or 7.9%, notching its best day since March 24, 2020. The tech-heavy Nasdaq Composite led the charge with an eye-popping 12.2% rally—its largest since January 3, 2001.
Markets had been reeling since Trump announced sweeping tariffs on April 2, leaving stocks deeply oversold and primed for a rebound. According to Michael Arone, chief investment strategist at State Street Global Advisors, “New U.S. tariff rates were not sustainable, and today the Trump administration finally admitted it. Investors got their first bit of good news since last Wednesday.”
In a social media post, Trump revealed that China would face a new, sharply increased tariff rate of 125% (up from 104%), while most other nations would see a baseline 10% rate for the next 90 days. The move came roughly 15 hours after the initial round of tariffs had gone into effect, with the European Union facing a 20% tax, Japan 24%, and South Korea 25%.
This latest pivot underscores China’s role as the primary target in Trump’s trade war—a move investors appear willing to tolerate, having already weathered a similar conflict earlier in his presidency. Arone noted the market’s relative calm around isolating China, as opposed to imposing broad-based tariffs.
All eyes had been on Tuesday’s close, with the S&P 500 finishing at 4,982.77—its lowest level since April 19, 2024—bringing the index perilously close to bear-market territory.
“This is the biggest rally I’ve ever seen, and it’s stunning,” said Louis Navellier, founder of Navellier & Associates. “Will we retest the recent lows? Probably not. This looks decisive. Clearly, Trump watches the stock market—and he responded.”
Many believe the tipping point wasn’t just market performance but growing signs of distress in the bond market. Treasury yields spiked—10-year notes climbed to 4.293%—signaling that the traditional safe-haven role of government bonds was faltering. Analysts saw signs of forced unwinding in leveraged trades, fueling fears of a market freeze that might have required Fed intervention.
Still, uncertainty looms. The tariffs initially raised serious recession fears, which Wednesday’s announcement only partially eased. Earlier in the day, Goldman Sachs had made a recession their base-case forecast, only to walk it back after Trump’s revised policy.
Arone cautioned that while Wednesday’s rally was a victory for investors, volatility is far from over. “The trade war may not be over, but at least for today, investors have won the battle,” he said.
