| Key Points: – Dow jumps over 2,500 points as Trump pauses new tariffs for most countries, offering relief to jittery investors. – U.S. tariffs on China rise to 125%, keeping trade tensions elevated despite broader reprieve. – Major tech stocks surge, with Nvidia, Tesla, and Apple among top gainers as markets bet on trade negotiations progressing. |
U.S. stocks staged a historic rally on Wednesday after President Donald Trump announced a 90-day pause on new tariffs for most U.S. trade partners, easing investor fears of an imminent recession. The Dow Jones Industrial Average soared more than 2,500 points, or 7.3%, marking one of its largest single-day point gains on record. The S&P 500 jumped nearly 8%, while the tech-heavy Nasdaq rallied over 10% — its biggest percentage gain since 2008.
The market turnaround followed several volatile sessions driven by uncertainty surrounding Trump’s escalating tariff regime. Last week, broad-based levies sent stocks into a sharp correction, with the Nasdaq slipping into bear market territory and the S&P 500 teetering on the edge. The president’s announcement Wednesday came just as sentiment hit a breaking point, with record trading volumes and widespread calls for policy clarity.
On his Truth Social account, Trump stated that he had authorized a 90-day pause on new tariffs, reducing the baseline reciprocal duty to 10% during this period. However, he simultaneously raised tariffs on Chinese imports to 125%, signaling continued pressure on Beijing in the ongoing trade dispute. The announcement followed reports of active negotiations between the U.S. and over 70 countries, including South Korea and China, sparking hope that broader trade resolutions could be within reach.
Investors responded swiftly. Shares of major tech firms — many of which had been hit hard in recent weeks — led the rebound. Nvidia surged more than 15%, Tesla added 17%, and Apple, Amazon, and Meta each gained around 10%. The optimism also helped bring down market volatility, with the CBOE Volatility Index (VIX) dropping below 40 after reaching near-crisis levels above 60 earlier in the week.
The bond market reflected some caution, with the 10-year Treasury yield rising to 4.4% as investors rotated back into risk assets. Meanwhile, analysts and economists scrambled to reassess their outlooks. Goldman Sachs, which had just issued a call for a recession earlier in the day, revised its view within the hour following Trump’s tariff pause, now projecting modest GDP growth of 0.5% for 2025 and assigning a 45% probability to a recession.
Despite the market’s relief rally, uncertainty remains. China announced its own round of retaliatory tariffs on U.S. goods, set to take effect Thursday, further escalating tensions. Analysts noted that the 10% baseline tariff and steep levies on China remain in place, leaving room for continued volatility depending on how negotiations progress.
Investors also await more economic data to gauge the longer-term impact. Minutes from the Federal Reserve’s March meeting, due later Wednesday, and the upcoming Consumer Price Index report could further influence the outlook on inflation and monetary policy.
For now, however, markets are breathing a collective sigh of relief. The Trump administration’s pivot appears to have reinstated some faith that economic damage from aggressive tariff policies might still be contained if cooler heads prevail.