US stocks saw their biggest rally in years after President Donald Trump announced a pause on certain reciprocal tariffs. The move helped calm investor fears that had shaken markets over the past week.
The Dow Jones Industrial Average jumped 2,962.86 points, or 7.87 per cent, closing at 40,608.45, its biggest one-day gain since March 2020. The S&P 500 rose 9.52 per cent to finish at 5,456.90, its best performance since 2008.
The Nasdaq Composite soared 12.16 per cent to 17,124.97, marking its second-best day ever and the biggest gain since January 2001.
However, Trump said China won’t be exempted from the tariffs despite the pause. Trump raised the tariff rate for China to 125%, effective immediately, from the previously announced 104% tariff that had kicked off earlier on Wednesday. China also announced an additional import levy on US goods, imposing an 84% tariff from Thursday.
He said in a social media post that he is pausing his so-called “reciprocal tariffs” on many other trading partners because they had responded by reaching out for talks rather than retaliating and blamed China for “lack of respect”.
Meanwhile, US stocks surged to one of their biggest gains since World War II after Trump paused his tariffs against most other nations. The S&P 500 soared 9.5%, while Dow Jones Industrial Average flew nearly 3,000 points higher, and the Nasdaq composite jumped 12.2%.
The about-face in the expanding trade war jolted investors who had previously been fleeing for the sidelines. The tech-heavy Nasdaq roared ahead 12%, its best day in 24 years. The S&P 500 added 9.5% in its biggest gain since 2008, while the Dow Jones Industrial Average moved ahead 7.9%, its biggest day since 2020. The 2,963-point rally in the blue-chip index was its largest point gain on record, according to Dow Jones Market Data.
The moves started shortly after 1 p.m. in New York, when the president’s post on Truth Social lifted all three major indexes in minutes.
“More than 75 Countries,” Trump wrote, “have called to negotiate a solution…and have not, at my strong suggestion, retaliated in any way, shape, or form.”
Because of that, he wrote, “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”
The upbeat mood continued Wednesday night, with stock futures tied to the Dow and S&P 500 climbing.
Earlier, Trump counseled cool and Treasury Secretary Scott Bessent told bankers “we are in pretty good shape” on the economy. Earlier, JPMorgan chief Jamie Dimon had said the economy was likely headed for a recession.
Trump’s reciprocal tariffs on nearly 100 nations took effect overnight, including a 104% tariff on Chinese imports. On Wednesday, Beijing said it would raise levies on U.S. imports to 84%, from 34%. In his early-afternoon social-media post, Trump wrote that he had raised the tariff imposed on China to 125%, “effective immediately.”
Also under scrutiny was the selloff in U.S. Treasurys. The yield on the 10-year note, the reference point for trillions of dollars in loans and securities, rose as high as 4.47% Wednesday before retreating to about 4.41% after the tariff news and a 10-year Treasury note auction was met by strong demand.
Still, the yield is up about 0.42 percentage point over the past three trading days, amid lingering nervousness about holding Treasurys ahead of a government auction Thursday. That earlier anxiety contributed to a global stock selloff, with Japanese equities falling 3.9% and Europe’s main benchmark down 3.5%.