5-year record surge for US stocks as Trump presses pause on some tariffs

US stocks jumped the most since March 2020 and short-term Treasuries tumbled after President Donald Trump paused the highest tariffs on countries that have not retaliated, a group that excludes China.

The S&P 500 Index more than 9.5% at the close in New York.The Nasdaq 100 Index surged almost 12% and the Dow Jones Industrial Average rallied almost 8%. The two-year Treasury yield hit 3.8% before closing at 3.9%. Circuit breakers designed to tamp down volatility in times of market turbulence only trigger for downside moves.

“I have authorized a 90-day pause, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted on Truth Social.

As of 3.38pm, all 11 S&P 500 sectors rose at least 2.5%. Delta Air Lines Inc. soared 15%, Advanced Micro Devices added 13% and Tesla Inc. rallied 11%. Nvidia Corp. and other major chipmakers rose at least 10%. Only four S&P 500 stocks were lower.

“The idea of a 90 day pause is clearly one of the things that the market wanted to hear,” Steve Sosnick, chief strategist at Interactive Brokers LLC. “If this wasn’t the 'Trump Put,’ it certainly comes close.”

US stocks are on pace to post the first daily gain after Trump announced tariffs on US trading partners. Stocks briefly fell into the bear market earlier this week. In response, China raised its tariff on goods imported from the US to 84%. The countermeasures are effective April 10, and follow the White House slapping a 104% tax on many Chinese imports. 

“Wow. Looks like the ‘Trump put’ is finally being played by the Administration!” said Matt Maley, chief market strategist at Miller Tabak + Co. “This will cause a huge amount of short covering. The question will be whether the rally lasts.”

Some trading desks saw a spike in retail buying. JPMorgan Chase & Co. global quantitative and derivatives strategist Emma Wu said retail traders bought $719 million in first hour of the day, higher than the average volume in the last month.

One potential driver of retail flows came from President Donald Trump, writing on Truth Social that “this is a great time to buy” and urging Americans to “BE COOL” amid the turbulence.

“Trying to keep up with it is insane,” said Ross Mayfield, an investment strategist at Baird Private Wealth Management, referring to the President’s online comments. “If that’s enough to move markets, then I guess that it’s the kind of market we’re in.”

US stocks are the most oversold since the depths of the pandemic, and traders are looking for a market bottom. One technical level to watch is is 4,910, the roughly 20% threshold below the S&P 500’s February peak, which provided key support late Tuesday. 

There are also signs of support for the S&P 500 around 5,000. Goldman Sachs Group Inc. partner John Flood said this is a level where long-term investors are starting to buy the dip. “From my conversations with longer-duration investors, it feels like they will start scale buying the S&P 500 at 5,000 and get more aggressive in the mid-4,000s,” he wrote in a note to clients on Tuesday.

To Societe Generale’s Arthur van Slooten, investors are focused on potential policy reactions to tariffs, such as negotiations, retaliation and opportunities for a market rebound.

“For investors that are ready to accept a high level of market volatility a ‘tarrific’ entry-point has just been created,” van Slooten wrote.

US companies are already struggling to navigate the uncertainty. Amazon has canceled orders for multiple products made in China and other Asian countries, a sign that it wants to limit exposure to heavy import taxes. Delta Air Lines Inc. withdrew its full-year financial guidance, declining to reaffirm a forecast issued in January. Shares in large US and European drugmakers slid after President Donald Trump said the US was planning to announce “a major tariff on pharmaceuticals” soon. 

Shares in oil and gas producers dropped Wednesday morning, following crude prices lower as the intensifying trade war endangers energy demand.

“Combined with uncertainty about retaliation, lower consumer sentiment, lower corporate sentiment, and the negative wealth effect of the $10 trillion decline in the stock market, we continue to worry about downside risks to markets and the economy,” Apollo Management’s Torsten Slok wrote.