NEW YORK — U.S. stocks are surging on a euphoric Wall Street Wednesday after President Donald Trump said he would temporarily back off on some of his tariffs, as investors had desperately hoped he would.
The S&P 500 was up 7.8% in afternoon trading. It had been down earlier in the morning amid worries about Trump’s trade war and whether it would cause a recession as economists fear. But it spiked immediately after Trump sent the social media posting that investors have been waiting for.
Trump said that because so many countries had “not retaliated” against his latest crank higher in tariffs, he said, “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!”
The Dow Jones Industrial Average was up 2,476 points, or 6.6%, as of 1:35 p.m. Eastern time, and the Nasdaq composite was 9% higher.
Trump, though, also said that he was raising tariffs even higher against China, up to 125%.
Huge swings have become routine for financial markets worldwide recently, not just day to day but hour to hour, as investors struggle to game out what Trump’s trade war will do to the economy. On Tuesday, the S&P 500 careened between a gain of 4% and a loss of 3% for a second straight day of shocking reversals.
Wall Street’s latest moves came after Trump’s latest round of tariffs kicked in after midnight for imports from around the world. That included a 104% tax on things coming from China, and the world’s second-largest economy quickly retaliated by saying it would raise tariffs on U.S. goods to 84% on Thursday.
“If the U.S. insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end” the Ministry of Commerce said.
Such aggressive brinkmanship between the world’s two largest economies is raising fears that tariffs will stick around for a while, which economists and investors expect would create a recession.
Wall Street also got a boost Wednesday from a relatively smooth auction of U.S. Treasurys. Earlier jumps in Treasury yields had rattled the market, indicating increasing levels of stress.
Analysts say several reasons could have benbe behind the move, including hedge funds and other investors having to sell their Treasury bonds to raise cash in order to make up for losses in the stock market. Investors outside the United States may also be selling their U.S. Treasurys because of the trade war. Such actions would push down prices for Treasurys, which in turn would push up their yields.
Regardless of the reasons behind it, the higher yields on Treasurys add pressure on the stock market and will likely push up rates for mortgages and other loans for U.S. households.
The moves are notable because U.S. Treasury bonds have historically been seen as some of the safest possible investments, and their yields have tended to fall — not rise — during scary times for the market. This week’s sharp rise has brought the yield on the 10-year Treasury back to where it was in late February.
The yield on the 10-year Treasury pulled back to 4.36% after 4.50% earlier in the morning.
In stock markets abroad, indexes tumbled across most of Europe and much of Asia.
London’s FTSE 100 dropped 2.9%, Tokyo’s Nikkei 225 sank 3.9% and the CAC 40 fell 3.3% in Paris.
Chinese stocks were an outlier, and indexes rose 0.7% in Hong Kong and 1.3% in Shanghai.
