Markets Jolt as Tariff News Fuels Stock Surge

U.S. stocks experienced a wild ride on Wednesday, culminating in a significant rise after President Donald Trump announced on social media a 90-day halt on most reciprocal tariffs, sparing only China.

The day began unpredictably, with U.S. stocks initially experiencing mixed reactions due to China’s substantial retaliatory tariffs and the European Union’s countermeasures against Trump’s sweeping tariff policies, which disrupted global trade routes.

But things took a dramatic turn in the afternoon. Following Trump’s announcement on Truth Social about the 90-day pause, the Dow soared over 2,300 points, marking a 6.2% increase. The S&P 500 and the tech-heavy Nasdaq followed suit, jumping 7% and 8.5% respectively.

Shortly after the markets opened, Trump took to Truth Social with messages like “BE COOL!” and “This is a great time to buy!!!”, sparking investor enthusiasm.

Technology stocks, including Apple (AAPL), Nvidia (NVDA), and Tesla (TSLA), saw significant gains, each climbing over 6%, as investors seemingly took advantage of the low prices.

In sharp contrast, China’s tariffs on U.S. goods climbed to 84%, matching the U.S.’s latest tariff hike on the world’s second-largest economy. This led to a cumulative tariff of over 104% when combined with existing levies.

The European Union, in response to the U.S.’s 25% tariff on steel and aluminum, announced its first countermeasures set to take effect on April 15, cautioning these could be withdrawn should the U.S. agree to a balanced negotiation.

The S&P 500, teetering on the brink of a bear market with nearly a 20% drop since its February 19 peak, inched closer to closing in this territory, threatening to end a prolonged bull market that started after inflation peaked in mid-October 2022. Only the pandemic saw a faster descent from record highs to such lows in the S&P 500’s history.

Global investors are wary as tariffs risk pushing both the global and U.S. economies toward recession. With businesses and consumers likely to bear the financial burden, there’s a noticeable decline in hiring and spending.

International markets reflected this anxiety. Japan’s Nikkei index dropped by 4%, and while Hong Kong’s Hang Seng saw slight gains, it had undergone a dramatic 13% plunge on Monday—the largest since the 1997 financial crisis. South Korea’s Kospi entered bear market territory, declining 20% from its recent peak, despite announcing $1.3 billion in support for its auto industry in response to U.S. tariffs. The Taiwanese market also dropped sharply, contrasting with Shanghai’s slight gain.

Europe saw declines as well, with the STOXX 600 falling by 3.5%, France’s CAC index by 3.34%, Germany’s DAX by 3%, and London’s FTSE 100 by 2.92%.

Oil prices too reversed after significant drops—U.S. crude sank to $57 a barrel, and Brent crude briefly dipped below $60, their lowest since February 2021. Meanwhile, investors flocked to safe havens like gold, which rose 4%. Despite the turmoil, U.S. Treasury yields disturbingly climbed as investors sold off bonds, defying the typical crisis response.

The 10-year yield, which fell below 4% earlier, rose to 4.4%, a modest increase from the previous day. This unusual movement, according to Deutsche Bank, suggests waning demand for U.S.-backed assets amid trade tensions.

Concerns loom about America’s global standing due to Trump’s trade policies, with potential foreign threats to offload large Treasury holdings affecting U.S. borrowing capabilities. The dollar index fell by 0.5%, underscoring decreased investor confidence.

Volatility surged as the CBOE volatility index, or VIX, the recognized “fear gauge,” surpassed 50, a rare occurrence only seen twice before this week during significant financial upheavals. The VIX measures market sentiment and typically spikes during market downturns.

With a prevalent bearish sentiment, CNN’s Fear and Greed Index pointed to “Extreme Fear.” The persistent U.S.-China trade conflict keeps both nations locked in a standoff, leaving investors on edge and markets fluctuating wildly.

White House Press Secretary Karoline Leavitt stated Tuesday that China missed a deadline to ease a 34% retaliatory tariff on U.S. goods, prompting the U.S. to nearly double its tariffs on China by Wednesday morning.