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Stocks rebounded Wednesday, just days after their worst stretch in many years. President Trump announced a 90 day pause on tariffs that sent stock prices around the globe spiraling.
The S&P 500 soared 9.5% on Wednesday, its biggest one-day gain since October 2008. The tech-heavy Nasdaq Composite skyrocketed 12.2%—its second-largest daily gain since the turn of the century and its best day since January 2001. The Dow Jones Industrial Average rose by 7.8%. This was its best day since March 2021 and fifth-best performance since 2000.
Investors breathed relief on Wednesday after President Trump implemented a 90 day pause on the majority of tariffs that went into force overnight. Trump surprised Wall Street on Wednesday by announcing tariffs that were more extensive and steeper than expected. Stocks fell in the days that followed as economists warned that the tariffs could weigh on global economic growth and cause inflation.
Wednesday’s rally has helped the major indices recover much of their losses over the last seven days. The Nasdaq is now down only 2.7%, after finishing yesterday’s session over 13% below its close before “Liberation Day”. The S&P 500 has pared its losses from 12.1% to 3.8%, and the Dow closed Wednesday 3.8% off its level before the tariffs were announced.
“The stock market rebound is a combination of speculative investors needing to cover short positions; less fear of recession and stagflation; and optimism that tariff rates will ultimately end up lower than they are threatened today,” Comerica Bank Chief Economist Bill Adams said.
The tariff pause is just days before the big banks are scheduled to begin their first-quarter earnings, with JPMorgan Chase reporting on Friday. In his annual letter to shareholders, Jamie Dimon warned that tariffs would slow growth. Dimon also said early Wednesday that a recession was “likely” as a result of tariffs. Bank stocks soared in response Wednesday to the tariff pause.
The rally on Wednesday and the pause that followed could change the tone in earnings calls over the next few weeks. This pause could provide companies with a more clear backdrop for their guidance and offer some relief to a market that is hungry for direction,” wrote Gina Bolvin of Bolvin Wealth Management Group on Wednesday. Analysts expected tariff uncertainty to lead to a sharp decline in the number companies offering sales and earning guidance this quarter.
Bolvin continued, “However, there is uncertainty about what happens after the period of 90 days, leaving investors to deal with potential volatility in the near future.”
