US Stocks Surge After Trump Pauses Many New Tariffs

US stocks surged Wednesday after President Donald Trump announced a 90-day pause on many tariffs imposed a week ago.

After a back-and-forth start to the day, the Morningstar US Market Index closed 9.5% higher. The S&P 500 benchmark gained 9.5%, while the tech-heavy Nasdaq gained 12.0%. The Morningstar US Technology Index rose more than 13%. Among the most active stocks, Nvidia NVDA jumped 18%, Tesla TSLA rose more than 23%, and Apple AAPL rose over 15%.

It was a sharp turnaround for the equities market, which had seen four consecutive sessions of declines, in its worst selloff since the covid-19 crisis in 2020. Stocks were approaching bear market territory (defined as a 20% drawdown from their latest peak) as recently as Monday, and forecasters across Wall Street were raising the odds of a recession happening in 2025. “We just got a really good case study today on why you don’t want to make any big moves and trade on emotion,” says Jeff Buchbinder, chief equity strategist at LPL Financial.

Dominic Pappalardo, chief multi-asset strategist for Morningstar Investment Management, says the “windows of optimism” embedded in the 90-day pause helped fuel Wednesday’s dramatic rally. Affected countries now have “at least a small window to prepare, plan, and adjust for the impact,” he says. The pause “also opens the door for more lengthy negotiations, which could help lead to more compromise. Additionally, any willingness to pause sends a signal to the markets that the announcement was not nearly as ‘final’ as the President implied.”

Affected countries will revert to a 10% reciprocal tariff rate for the duration of the pause, Trump said.

Many uncertainties and risks surrounding US trade policy remain. One major exception to the relief on Wednesday was China; Trump said he had raised the overall effective tariff rate on the country to 125%.

Global Bond Markets Whipsaw

Government bonds also saw continued volatile trading on Wednesday, as investors built up their cash allocations to confront a sudden spike in uncertainty and volatility. As recently as Monday, yields had been as low as 3.9%, as safe-haven assets saw high demand.

More broadly, yields would normally be expected to fall as economists significantly raise the odds of a recession in the United States. That was the case immediately after Trump announced the first salvo of tariffs. Instead, yields have been rising, raising eyebrows across the markets.

Bond yields whipsawed following Trump’s announcement but were still higher on the day. The yield on the 10-year US Treasury stood at 4.4% Wednesday afternoon, up from 4.26% on Tuesday.