Relief Rally

Happy trader, at least for 1 day (McDermid/Reuters/CNBC)

The stock market bounced back today in one of "its biggest rallies in history".

The stock market mounted one of its biggest rallies in history after President Donald Trump announced a pause in some of his “reciprocal” tariffs on the globe, causing a market that has been under extreme pressure for the past week to explode higher.

The S&P 500 skyrocketed 9.52% to settle at 5,456.90 for its biggest one-day gain since 2008. For the broad market index, it was the third-biggest gain in post-WWII history. The Dow Jones Industrial Average advanced 2,962.86 points, or 7.87%, to close at 40,608.45 for its biggest percentage advance since March 2020. The Nasdaq Composite jumped 12.16% to end at 17,124.97, notching its largest one-day jump since January 2001 and second-best day ever.

About 30 billion shares traded hands, making it the heaviest volume day on Wall Street in history, according to records that go back 18 years.

“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted on his Truth Social. Trump, in the same post, said he was raising the tariff on China higher again to 125%.

Treasury Secretary Scott Bessent later clarified that all countries except China would return to the 10% baseline tariff rate, down from the higher rates that previously shocked the markets, as negotiations take place. The pause would not apply to sector tariffs, Bessent said.

Stocks that were heavily pressured by the trade war tensions led the comeback Wednesday afternoon. Apple and Nvidia soared more than 15% and nearly 19%, respectively. Walmart shares rallied 9.6%. Tesla shares climbed more than 22% on the back of the pause announcement.

The precipitous fall in the stock market since last Wednesday made it ripe for a bounce back upon any piece of good news. In this case the news was very hopeful--President Trump's 90-day pause in tariffs excluding China--and was a sign that tariffs were more a bargaining chip than a permanent fixture. However, the economic landscape before last Wednesday was not especially rosy, so the odds are against the one-day relief rally to continue much longer.