US markets soared back to life on Wednesday, recording their biggest one-daily rally in years after President Donald Trump declared a 90-day pause on new tariffs, as per a report by Reuters. The move came as a shock after weeks of turmoil led by the administration’s aggressive trade stand.
The S&P 500 hiked 9.5%, marking its largest gain since the 2008 financial crisis. The Nasdaq climbed 12.2%, recording its second biggest single-day rise ever, whereas the Dow Jones surged around 3,000 points to close above 40,600. Oil prices were also up, and the US dollar rebounded sharply.
Reason behind the US market skyrocket
The rally took place after Trump stated the US would temporarily pause new tariffs on most countries. However, Chinese imports would still be facing higher tariffs of up to 125%. The decision has been taken after sharp market selloffs and concerns regarding the tariff hikes could lead the economy into a recession.
Gina Bolvin, president of Bolvin Wealth Management Group, stated to Reuters, ‘’This is a crucial moment we’ve been waiting for”. ‘’The timing could not be better, coinciding with the start of earnings season.’’ Still, Bolvin cautioned that ‘’uncertainty looms over what happens after the 90-day period,’’ with volatility expected to come back.
Investors are keeping a close watch as the US earnings season has started. Big banks like JPMorgan Chase will announce their result on Friday. It will provide insight into how companies are handling the current economic condition.
Meanwhile, bond markets have indicated signs of recovery. The yield on the benchmark 10-year US Treasury marked a peak of 4.515% before easing to 4.328 % after a strong government auction. Earlier in the week, heavy bonds selloffs had increased fears about liquidity.
The US dollar has strengthened after slipping in the day. The dollar index jumped up by 0.25%, earning ground against the euro, Swiss franc, and yen. Meanwhile, oil markets joined the rally, too. Brent crude went up by more than 4% to $65.48 per barrel, and US WTI crude rose to $62.35.
(With inputs from Reuters)