Wall Street Rebounds as Trump Retreats on Tariffs

BySophia Johannson

Global financial markets staged a breathtaking recovery Wednesday as President Donald Trump partially reversed course on his controversial tariff policy, announcing a 90-day pause that sent the S&P 500 soaring 9.52% in its third-largest single-day gain since World War II. The dramatic policy shift came after nearly a week of market turmoil that had wiped out trillions in market value and pushed major indices to the brink of bear market territory.

“I thought people were jumping a little bit out of line. They were getting yippy,” Trump explained during a White House briefing after posting his decision on Truth Social. The announcement immediately transformed a modestly positive trading day into a historic rally, according to CNBC, with the Dow Jones Industrial Average finishing up nearly 3,000 points and the Nasdaq Composite rocketing 12.16% for its second-best day ever.

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Trading Frenzy Shatters Records

The abrupt policy reversal triggered an unprecedented surge in trading activity, with approximately 30 billion shares changing hands – the highest volume ever recorded in Wall Street history. Investors who had been aggressively selling or shorting stocks rushed to cover positions, while others raced to capitalize on deeply discounted prices after four consecutive days of steep losses.

“We’ve never seen anything like this,” said market analyst Sarah Chen of Morgan Stanley. “The market went from pricing in a recession to a relief rally in a matter of seconds.” The whiplash-inducing pivot highlights the extraordinary influence of presidential trade policy on global financial markets, with investors collectively adding back $5.8 trillion in market value during the session, according to Yahoo Finance.

Strategic Tariff Recalibration

Treasury Secretary Scott Bessent clarified that the pause would return most countries to the 10% baseline tariff rate while negotiations proceed, representing a significant reduction from the higher rates of up to 50% that had shocked markets and trading partners. The administration notably excluded China from the reprieve, instead increasing duties on Chinese imports to 125% – an escalation that signals continued pressure on Beijing despite the broader pullback.

“Each country will be a separate, bespoke negotiation,” Bessent told reporters, indicating that the administration would continue pursuing bilateral discussions rather than reverting to multilateral trade frameworks. The 90-day window creates breathing room for talks with key economic partners including Japan, the European Union, and South Korea, which had already begun preparing retaliatory measures.

Technology Sector Leads Recovery

Technology stocks, which had suffered the steepest losses during the selloff, led Wednesday’s rebound as companies with complex global supply chains saw immediate relief. Tesla shares surged 22.8%, recovering much of their recent losses, while semiconductor giant Nvidia jumped 18.7%. Apple, which derives significant revenue from China and relies heavily on Asian manufacturing, climbed 15.3% as investors reassessed supply chain risks.

“This is a reprieve, not a resolution,” cautioned portfolio manager Richard Wong of Blackrock. “The administration has essentially hit the pause button on a trade policy that rattled global markets, but the underlying tensions remain unresolved.” Small-cap stocks also rebounded sharply, with the Russell 2000 climbing 8.7% after entering bear market territory earlier in the week.

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Bond Market Signals Persistent Concerns

Despite the equity market jubilation, bond investors showed continued skepticism about the long-term economic outlook. The yield on 10-year Treasury notes rose 14 basis points to 4.40%, extending its three-day surge to more than 50 basis points – the steepest such increase since 2001. This persistent bond selloff suggests fixed-income investors remain concerned about inflation risks and potential long-term damage to trade relationships.

“The equity market is celebrating a reprieve, but the bond market is still signaling trouble ahead,” noted fixed-income strategist James Harrison. “The tariff pause doesn’t eliminate inflation concerns, and it’s unclear what happens after 90 days.” Goldman Sachs quickly revised its economic forecast following the announcement, scaling back recession probabilities but maintaining relatively muted growth expectations of just 0.5% for the year.

As market participants catch their breath after a week of extraordinary volatility, attention now turns to whether the administration can transform this temporary pause into lasting trade stability – or whether investors should prepare for another round of disruptive policy shifts when the 90-day window closes in July. With China’s 84% retaliatory tariffs still set to take effect and complex negotiations ahead, the truce in global trade tensions remains both fragile and incomplete.

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