S&P 500 surges 7% as Trump brings tariff relief

The announcement on Wednesday evening confirmed that tariffs on China would rise to 125%, while tariffs for other countries would be suspended for 90 days. The American stock market responded enthusiastically. Investors welcomed this decision with open arms.

The S&P 500 index climbed 7% to exceed 5,300 points, marking the largest single-day increase in the index over the past five years. Similarly, the Dow Jones Industrial Average jumped 5.7%, also experiencing its largest gain since 2020. The Nasdaq Composite soared 8.8%.

On the American stock exchange, shares are rebounding for companies that previously suffered significantly due to the trade war initiated by Donald Trump. Apple saw a 7% increase, Nvidia climbed 10%, and Walmart rose 9%.

"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," Trump wrote in a post on his social media platform Truth Social.

"Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately," he added.

Thus, the information from Monday, which the White House quickly dismissed as a rumor, was indeed true. Two days ago, international sources including Yahoo Finance, the Times of Israel, and the Economic Times, via the Reuters agency, reported that Trump was considering a 90-day tariff break, except for China. And although the information only "lived" for 7 minutes, it sparked a significant market surge.

A few hours earlier, Trump assured on Truth Social: "BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!"

This post coincided with the opening of the Wall Street stock exchange. In another post, he stated: "This is a great time to buy!" He reiterated sentiments from a few days earlier, aiming to soothe investors' concerns.

"My policies will never change," Donald Trump addressed investors last week in an effort to encourage investments in the U.S. following the announcement of high tariffs on global goods. Meanwhile, Vice President Vance expressed that "one bad day in the stock market and (...) we're going to have a booming stock market for a long time because we’re reinvesting in the United States of America."

Representatives from the President's administration delivered mixed signals on Wednesday and Thursday about potentially lifting tariffs through negotiations with other countries. Commerce Secretary Howard Lutnick initially stated there was no chance of Trump abandoning tariffs, but later hinted at the President's openness to negotiations.

Although Trump's post injected considerable optimism into the American stock market, analysts remain cautious. Sam Stovall, chief investment strategist at CFRA Research, pointed out that Trump's decision opens the door to at least short-term growth, but he cautioned against assuming that the market has already hit bottom. He emphasized that repeatedly falling for the same situation reflects poorly on investors' judgment.

CNBC highlights that concerns about the introduction of tariffs triggered four consecutive days of stock price declines. Over the course of the previous four trading sessions, the Dow dropped by more than 4,500 points, the S&P 500 declined by 12%, and the Nasdaq Composite saw a decrease of over 13%. Such steep losses had not been recorded since the pandemic.