The stock market exploded higher on Wednesday to one of their best days in history after President Trump said he would place a 90-day pause on his reciprocal tariffs, adding that he would lower that rate to 10% for most countries effective immediately.
The Dow Jones Industrial Average surged 2,963 points, or 7.9%, to close at 40,608, while the broad-based S&P 500 climbed 474 points, or 9.5%, to 5,457. The tech heavy-Nasdaq composite index jumped 1,857 points, or 12.2%.
The S&P 500’s gain was the biggest one-day increase since October 2008, according to financial services company Factset.
One notable exception to Mr. Trump’s decision is China, with the president saying he’s increasing the tariff rate on goods imported from that nation to 125%.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” he wrote.
Prior to the announcement, the S&P 500 had been down about 17% from its mid-February peak, pushing stocks toward a bear market, or when shares fall more than 20% from their most recent high, according to financial data firm FactSet.
Even with today’s gain, the S&P 500 remains 11% below its February 19 peak of 6,147.
Investors have been spooked by Mr. Trump’s escalating trade war, which Wall Street economists warn could raise the risk of a recession and hurt U.S. corporations and consumers by hiking prices on products from almost every nation.
Even before Mr. Trump’s announcement, some on Wall Street had expressed optimism that the White House could back down from the reciprocal tariffs, which slapped rates of between 10% to 84% on U.S. trade partners.
Despite the pause, experts noted that uncertainty remains an issue for U.S. businesses, given that the tariffs could restart in 90 days and that the penalties on China — a major trading partner — are likely to dampen economic growth.
“Businesses will be relieved that the destination for trade policy looks like it could be less disruptive than seemed possible yesterday,” said Bill Adams, chief economist for Comerica Bank. “Even so, the huge overhang of policy uncertainty will weigh on investment and weak decisions in the next few months.”
He noted, “Also, 125% tariffs on Chinese imports will be a huge problem for many businesses if they stay in place.”
Best stock performers today
The gains were widespread across the U.S. stock market, and 98% of the stocks in the S&P 500 index rallied.
Among the best performers were tech stocks, including chip maker Nvidia, which gained 18.7%, and Apple, which jumped more than 15%.
Also leading the way were airlines and other stocks that depend on customers feeling confident enough to travel for work or for vacation. Delta Air Lines soared 23.4%, while American Airlines gained 22.6%.
China trade war intensifies
Still, the trade war continues between the U.S. and China continues to rage. On Wednesday, China said it is raising its tariffs on U.S. products to 84%, up from its previously announced 34%, after President Trump’s import duties on Chinese good went into effect today at a rate of 104%. The retaliation signals Beijing isn’t backing down from Mr. Trump’s global trade war.
Mr. Trump’s broad-based reciprocal tariffs, which apply to imports of almost every nation, had kicked in after midnight Eastern time in the U.S.
Already, there are signs that some corporations are feeling the impact of Mr. Trump’s tariff policies, with Delta on Wednesday pulling its guidance for 2025 as the trade war depresses bookings across the travel sector.
“With broad economic uncertainty around global trade, growth has largely stalled,” CEO Ed Bastian said in a statement on Wednesday. “In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control.”
With corporate earnings season starting in the U.S., investors will be carefully watching the guidance from large companies such as Delta. On Wednesday, Walmart said it is standing behind its full-year sales and operating income outlook even amidst the growing trade war.
The nation’s largest retailer said that it expects first-quarter sales growth of 3% to 4%, but added that its range of outcomes has “widened due to less favorable category mix” and “the desire to maintain flexibility to invest in price as tariffs are implemented.”
contributed to this report.