Wall Street surges after Trump pauses many of his tariffs
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Experts say tariffs will affect everyday purchases, but as negotiations continue, exact price increases remain unclear.
NEW YORK — U.S. stocks soared to one of their best days in history on a euphoric Wall Street on Wednesday after President Trump said he would back off on most of his tariffs temporarily, as investors had so desperately hoped he would.
The S&P 500 surged 9.5%, an amount that would count as a good year for the market. It had been sinking earlier in the day on worries that Trump’s trade war could drag the global economy into a recession. But then came the posting on social media that investors worldwide had been waiting and wishing for.
“I have authorized a 90 day PAUSE,” Trump said, after recognizing the more than 75 countries that he said have been negotiating on trade and had not retaliated against his latest increases in tariffs.
Treasury Secretary Scott Bessent later told reporters that Trump was pausing his so-called “reciprocal” tariffs on most of the country’s biggest trading partners but maintaining his 10% tariff on nearly all global imports. (The term “reciprocal” is generally understood to mean charging an equal rate on imports as the other nation charges on exports, but Trump is imposing higher rates.)
China was a huge exception, though, with Trump saying tariffs are going up to 125% against its products. That raises the possibility of more swings ahead that could stun financial markets.
The trade war is not over, and an escalating battle between the world’s two largest economies can create plenty of damage. U.S. stocks are also still below where they were just a week ago, when Trump announced worldwide tariffs in what he called “Liberation Day.”
But on Wednesday, at least, the focus on Wall Street was on the positive. The Dow Jones industrial average shot to a gain of 2,962 points, or 7.9%. The Nasdaq composite leaped 12.2%. The S&P 500 had its third-best day since World War II.
The relief came after doubts had crept in about whether Trump cared about the financial pain the U.S. stock market was taking because of his tariffs. The S&P 500, the index that sits at the center of many 401(k) accounts, started the day nearly 19% below its record set less than two months ago.
That surprised many professional investors, who had long thought that a president who used to crow about records for the Dow under his watch would pull back on policies if they sent markets reeling.
Trump’s worldwide tariffs are putting the squeeze on several high-profile L.A.-based toy makers and apparel companies.
Wednesday’s rally pulled the S&P 500 index away from the edge of what’s called a bear market. That’s what professionals call it when a run-of-the-mill drop of 10% for U.S. stocks, which happens every year or so, graduates to a more vicious fall of 20%. The index is now down 11.2% from its record.
Wall Street also got a boost from a relatively smooth auction of U.S. Treasurys in the bond market Wednesday. Earlier jumps in Treasury yields had rattled the market, indicating increasing levels of stress. Trump himself said Wednesday that he had been watching the bond market “getting a little queasy.”
Analysts say several reasons could be behind the rise in yields, including hedge funds and other investors having to sell their Treasury bonds to raise cash to make up for losses in the stock market. Investors outside the United States may also be selling their U.S. Treasurys because of the trade war. Such actions would push down prices for Treasurys, which in turn would push up their yields.
Some of the strongest action early Wednesday was in the U.S. bond market, where Treasury yields rose sharply again. The yield on the 10-year Treasury rose to 4.36% from 4.26% late Tuesday and from just 4.01% at the end of last week. It got as high as 4.50% earlier in the morning. That’s a huge move for the bond market and could be an indication of stress.
Regardless of the reasons behind it, the higher yields on Treasurys add pressure on the stock market and will probably push up rates for mortgages and other loans for U.S. households. Futures for the S&P 500 and other U.S. stock indexes pared their losses Wednesday morning as Treasury yields pared their big gains.
All the uncertainty about tariffs is making planning more difficult for big U.S. companies.
Experts say tariffs will affect everyday purchases, but as negotiations continue, exact price increases remain unclear.
Delta Air Lines pulled financial forecasts for 2025 on Wednesday as the trade war scrambles expectations for business and household spending and depresses bookings across the travel sector. Its stock rose 7.1%.
“With broad economic uncertainty around global trade, growth has largely stalled,” Chief Executive Ed Bastian said in a statement Wednesday. “In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control.”
In stock markets abroad, indexes tumbled across most of Europe and much of Asia.
London’s FTSE 100 dropped 2.7%, Tokyo’s Nikkei 225 sank 3.9% and the CAC 40 fell 3.3% in Paris.
Chinese stocks were an outlier, and indexes rose 0.7% in Hong Kong and 1.3% in Shanghai.
Choe writes for the Associated Press.
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