NEW YORK — In an unprecedented rally, U.S. stocks witnessed a historic surge on Wednesday as Wall Street responded buoyantly to President Donald Trump’s temporary easing of tariffs, a move that investors had eagerly anticipated. This remarkable recovery was marked by the S&P 500 soaring by 9.5%, a gain typically equated with a successful year for the market.
Initially, the day appeared bleak with concerns mounting that Trump’s trade war might plunge the global economy into a recession. However, the landscape shifted dramatically following a social media announcement from Trump, which investors globally had been keenly awaiting.
Trump announced a “90-day PAUSE” on most tariffs, acknowledging negotiations with more than 75 countries that had refrained from retaliating against his tariff increases. Treasury Secretary Scott Bessent corroborated this by indicating a halt on the so-called ‘reciprocal’ tariffs affecting the country’s major trading partners, although a 10% tariff remained on nearly all global imports.
Notably, China was excluded from this reprieve, with tariffs on its products escalating to 125%. This decision left open the potential for further market volatility, highlighting the ongoing nature of the trade dispute between the world’s two largest economies, which could cause extensive economic harm.
Despite this, Wednesday’s optimism on Wall Street was undeniable. The Dow Jones Industrial Average catapulted by 2,962 points, or 7.9%, while the Nasdaq composite jumped 12.2%. This day marked the S&P 500’s third-best performance since 1940.
This surge came as a relief after skepticism had grown about Trump’s regard for the financial turmoil his tariffs imposed on the U.S. stock market, which had seen the S&P 500 plummet nearly 19% from its record just two months prior.
The rally pulled the S&P 500 back from the brink of a “bear market,” a term denoting a decline of 20% or more in U.S. stocks. At present, the index is now down by 11.2% from its record high.
Moreover, a relatively seamless auction of U.S. Treasurys also buoyed Wall Street’s confidence. Previous hikes in Treasury yields had unsettled the market by suggesting heightened levels of stress. Trump himself remarked on observing the bond market’s unease.
Analysts attribute rising yields to various factors, such as U.S. investors liquidating Treasury bonds to cover stock market losses, or international investors divesting from U.S. Treasurys amid the trade war. These actions decrease Treasury prices, thereby increasing yields.
Higher Treasury yields can exacerbate stock market pressure and drive up interest rates on mortgages and loans for U.S. households and businesses.
Historically, Treasury yields drop rather than rise during market turmoil, as the bonds are perceived as safe investments. However, this week’s sharp increase saw the 10-year yield reverting to late-February levels. Following Trump’s pause and the Treasury auction, the 10-year yield, which approached 4.50% earlier, retreated to 4.34%.
Despite the temporary tariff relief, the trade war persists. Bessent and Trump voiced their frustration with China, which has continued to elevate tariffs on U.S. goods.
China announced plans to hike tariffs on U.S. goods to 84%, signaling its readiness to further counteract U.S. trade restrictions.
Wednesday’s stock market rally emphasized a recurring theme in financial markets, where significant gains follow substantial downfalls. This pattern underscores the risk of market timing and highlights the sage advice to avoid selling long-term investments during volatility to prevent missing out on substantial gains.
Historically, the S&P 500 achieved its largest post-World War II gain of 11.6% on October 13, 2008, amid the Great Recession’s lasting uncertainties. The index saw another major rise of 10.8% shortly thereafter.
Broad-based gains swept across the U.S. stock market on Wednesday, with 98% of S&P 500 stocks rallying. This wave was led by airlines and companies relying on consumer confidence for travel and leisure.
Delta Air Lines’ shares soared by 23.4% after suspending its 2025 financial forecasts due to trade war-induced uncertainties. Overall, the S&P 500 surged 474.13 points to close at 5,456.90, the Dow gained 2,962.86 to 40,608.45, and the Nasdaq rocketed 1,857.06 to 17,124.97.
In international markets, European and Asian indices experienced downturns, having closed before Trump’s announcement. London’s FTSE 100 declined by 2.9%, Tokyo’s Nikkei 225 fell by 3.9%, and Paris’ CAC 40 slipped by 3.3%. Conversely, Chinese markets posted gains, with the Hong Kong index up by 0.7% and Shanghai rising by 1.3%.