Following Donald Trump’s decision to halt plans for steep tariffs on trading partners, US stocks saw a significant surge on Wednesday. However, investors and analysts remain cautious as uncertainty regarding the tariffs continues.
The S&P 500 experienced a 9.5% increase, while the Nasdaq Composite soared by 12%, marking their best performance since 2008 and 2001 respectively, according to FactSet data.
Trump’s announcement to postpone the implementation of reciprocal tariffs on most countries for 90 days helped alleviate some of the market turmoil triggered by his earlier tariff threats.
“This move can be seen as Trump yielding to market pressure. By maintaining tariffs on China, he has managed to save face,” remarked Andy Brenner, head of international fixed income at NatAlliance Securities.
Goldman Sachs quickly revised its prediction of a US recession following Trump’s latest decision.
Despite the positive market reaction, Trump increased tariffs on China, the world’s leading exporter, by approximately 125%, and maintained other levies, including a 10% universal duty.
Bob Michele, chief investment officer at JPMorgan Asset Management, noted that there hasn’t been a significant shift in the bond market yet. He emphasized the lingering uncertainty and concerns about inflation exceeding the Federal Reserve’s target.
Citigroup also warned that pausing reciprocal tariffs, excluding China, does not guarantee a slowdown in economic growth or inflation. The bank highlighted the ongoing uncertainty surrounding trade policies and the potential impact on second-quarter growth.