AE Wealth Management: Market Minute — Markets soar as tariff pause provides relief
Markets soar as tariff pause provides relief
After days of market turbulence, U.S. equities roared back to life on Wednesday, with the S&P 500 climbing 9.52% and the Nasdaq surging 12.16%.1 The catalyst? A 90-day pause on new tariffs announced by the Trump administration, providing relief to markets concerned about escalating trade tensions.2
The pause applies to most countries, maintaining a baseline tariff of 10%; however, tariffs targeting China rose sharply to 125% as part of a strategy to renegotiate trade terms.3 While the targeted approach signals continued friction with China, the broader pause has been interpreted as a step toward stabilizing global trade.
Treasury Secretary Scott Bessent also indicated a shift toward balanced tariff discussions, prioritizing equal terms over unrealistic goals of zero trade deficits.4 This change in tone suggests potential flexibility in ongoing trade negotiations, which markets found encouraging.
Investor Reaction
The news brought a swift reaction as systematic funds, ETF flows, and options traders fueled a wave of buying. Volume was particularly strong, with the NYSE Arms Index dropping into levels historically associated with panic-like buying.
While volatility (as measured by the VIX) remains elevated, today’s rally demonstrates the market’s resilience and a clear appetite for policy decisions that prioritize economic steadiness.
What Comes Next?
Although the pause provides an immediate boost, long-term questions remain. Trade negotiations with China are likely to remain complex, and further tensions could reignite volatility in equity markets. However, the administration has indicated that numerous countries are ready to renegotiate trade terms, potentially opening up avenues for improved deals.
Investors should approach this period cautiously, maintaining diversified portfolios and monitoring market and policy developments closely in the weeks to come.
Markets can turn quickly; staying informed allows for better decision-making in a volatile economic landscape.
1 Ben Werschkul. Yahoo! Finance. April 9, 2025. “Trump says he decided on 90-day tariff pause because people were ‘yippy’ and ‘afraid.’” https://finance.yahoo.com/news/trump-says-he-decided-on-90-day-tariff-pause-because-people-were-yippy-and-afraid-181126787.html. Accessed April 9, 2025.
2 Reuters. April 9, 2025. “Investors react as stocks jump on Trump’s tariff pause.” https://www.reuters.com/markets/us/stocks-rally-trump-tariff-pause-after-market-rout-2025-04-09/. Accessed April 9, 2025.
3 Franco Ordoñez. NPR. “Trump says he will pause tariff hikes for 90 days, but not for China.” https://www.npr.org/2025/04/09/nx-s1-5357645/trump-tariffs-paused. Accessed April 9, 2025.
4 John Melloy, Hakyung Kim. CNBC. “Dow surges 2,900 points, S&P 500 posts biggest gain since 2008 on Trump tariff reversal: Live updates.” https://www.cnbc.com/2025/04/08/stock-market-today-live-updates-.html. Accessed April 9, 2025.
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