US stocks jumped after President Trump announced a 90-day pause on most tariffs. This pause did not include China. Investors had been waiting for any change in Trump’s tariff policy. When the announcement came, the stock market responded strongly. The pause in tariffs brought relief to many who had been worried about trade tensions. The market quickly rose as a result.
Historic Rally in the Stock Market
The stock market saw a huge rally after Trump’s announcement. The Dow increased by 2,963 points, or 7.87%. The S&P 500 rose by 9.52%. The Nasdaq climbed 12.16%. It was one of the best days for the market in years. The S&P 500 had its best day since October 2008. It also had the third-best day since 1957. The Nasdaq had its best day since 2001. The Dow had its best day in five years. These numbers show how much the market needed a change in direction.
Why the Market Reacted So Strongly
The market reacted so strongly because it was looking for clarity. Chris Brigati, a market expert, said the market was unsure about Trump’s approach to tariffs. When Trump announced the pause, it gave investors hope. Many stocks went up, with nearly every company in the S&P 500 showing gains. Big companies like Amazon, Nike, and United Airlines saw major increases. Amazon rose by almost 12%. Nike gained over 11%. United Airlines went up by 26%. This showed that investors were eager for positive news.
Ongoing Uncertainty in Trade Relations
Even though the market surged, uncertainty still hangs over the trade situation. Trump raised tariffs on China to 125%. He also kept a 10% tariff on other US imports. Investors are still unsure about how the trade war with China will unfold. Trump has kept everyone guessing about when these tariffs will end. He posted on social media to say, “BE COOL!” and “This is a great time to buy!!!” But he did not mention whether the stock market’s reaction influenced his decision. The pause was a positive step, but the situation is far from settled.
A Strong Start Turns Around Quickly
The stock market had a rough start to the day. China and the European Union both announced countermeasures to Trump’s tariffs. At first, it looked like the trade war would escalate further. But after Trump’s announcement, the market turned around. Investors responded positively, and stocks surged. The S&P 500, which had been close to bear market territory, saw a quick recovery. The Dow, Nasdaq, and S&P 500 all posted strong gains by the end of the day.
Global Markets React Differently
Markets around the world reacted differently. Japan’s Nikkei index fell by 4%. However, Hong Kong’s Hang Seng index finished higher. South Korea’s stock market entered a bear market, showing a 20% drop from its recent peak. Taiwan’s markets also saw a sharp decline. On the other hand, the Shanghai stock market closed higher. In Europe, the situation was worse. The STOXX 600 index dropped by 3.5%. France’s CAC index went down by 3.34%. Germany’s DAX and London’s FTSE 100 also posted losses. Even though global markets faced challenges, the US market quickly bounced back.
Oil Prices and Bond Market Activity
Oil prices had a rough start to the day but recovered quickly. US oil gained 4.65%, reaching $62.35 per barrel. Earlier, oil prices had fallen to $57. But after Trump’s announcement, oil prices surged. Brent crude oil also gained 4.23%. This shows that investors started to feel better about the economy after the news. Oil prices had dropped earlier due to fears of a global recession. But with the positive market reaction, oil prices went up again.
Meanwhile, the bond market was unstable. Normally, investors turn to bonds for safety in times of uncertainty. But recently, bond prices fell as yields rose. US Treasury yields went above 4.3%. This shows that many investors are feeling nervous. Some analysts are worried that the sell-off in bonds could mean less demand for US-backed assets. This is something to watch closely in the coming days.
Volatility in the Market
The stock market has seen high levels of volatility recently. The CBOE Volatility Index (VIX) measures how much the market is expected to move. The VIX dropped sharply after Trump’s tariff announcement. This showed that investors felt more at ease. The VIX had surged to over 50 earlier in the week. This level of volatility is unusual and shows that investors were nervous. But after Trump’s pause, the VIX dropped to 33. This reflects less fear in the market, though it remains high compared to normal levels.
Ongoing Fear of Trade War with China
Even with the market bounce, uncertainty remains. Susannah Streeter, a market expert, said the US and China are now locked in a trade war. Both sides are unlikely to back down. Investors remain cautious, and the market could see more ups and downs. The trade war is far from over. Investors are still worried about what will happen next. Even though the market surged, the path forward is unclear.
