Wall Street’s euphoria sends stocks to historic gains after Trump pauses most of his tariffs

U.S. stocks soared to one of their best days in history on a euphoric Wall Street on Wednesday after President Donald Trump said he would back off on most of his tariffs temporarily, as investors had so desperately hoped he would.

The S&P 500 surged 9.5%, an amount that would count as a good year for the market. It had been sinking earlier in the day on worries that Trump’s trade war could drag the global economy into a recession. But then came the posting on social media that investors worldwide had been waiting and wishing for.

“I have authorized a 90 day PAUSE,” Trump said, after recognizing the more than 75 countries that he said have been negotiating on trade and had not retaliated against his latest increases in tariffs.

Treasury Secretary Scott Bessent later told reporters that Trump was pausing his so-called ‘reciprocal’ tariffs on most of the country’s biggest trading partners, but maintaining his 10% tariff on nearly all global imports.

China was a huge exception, though, with Trump saying tariffs are going up to 125% against its products. That raises the possibility of more swings ahead that could stun financial markets. The trade war is not over, and an escalating battle between the world’s two largest economies can create plenty of damage. U.S. stocks are also still below where they were just a week ago, when Trump announced worldwide tariffs on what he called “Liberation Day.”

But on Wednesday, at least, the focus on Wall Street was on the positive. The Dow Jones Industrial Average shot to a gain of 2,962 points, or 7.9%. The Nasdaq composite leaped 12.2%. The S&P 500 had its third-best day since 1940.

All told, the S&P 500 rocketed to 5,456.90. The Dow Jones Industrial closed at 40,608.45, and the Nasdaq composite surged to 17,124.97.

The relief came after doubts had crept in about whether Trump cared about the financial pain the U.S. stock market was taking because of his tariffs. The S&P 500, the index that sits at the center of many 401(k) accounts, came into the day nearly 19% below its record set less than two months ago.

That surprised many professional investors, who had long thought that a president who used to crow about records for the Dow under his watch would pull back on policies if they sent markets reeling.

Wednesday’s rally pulled the S&P 500 index away from the edge of a bear market. That’s what professionals call it when a run-of-the-mill drop of 10% for U.S. stocks, which happens every year or so, graduates into a more vicious fall of 20%. The index is now down 11.2% from its record.

Wall Street also got a boost from a relatively smooth auction of U.S. Treasurys in the bond market Wednesday. Earlier jumps in Treasury yields had rattled the market, indicating increasing levels of stress. Trump himself said Wednesday that he had been watching the bond market “getting a little queasy.”

Analysts say several reasons could be behind the rise in yields, 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, higher yields on Treasurys add pressure on the stock market and push upward on rates for mortgages and other loans for U.S. households and businesses.

The moves are particularly notable because U.S. Treasury yields have historically dropped—not risen—during scary times for the market because the bonds are usually seen as some of the safest possible investments. This week’s sharp rise had brought the yield on the 10-year Treasury back to where it was in late February.

After approaching 4.50% in the morning, the 10-year yield pulled back to 4.34% following Trump’s pause and the Treasury’s auction. That’s still up from 4.26% late Tuesday and from just 4.01% at the end of last week.

Of course, the trade war is not over. Bessent and Trump clearly showed their anger at China, which has been ratcheting up its own tariffs on U.S. goods and announcing other countermeasures with each move Trump has made.

China earlier said 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.

Later the U.S. Treasury secretary said in a message to countries worldwide, but perhaps most directly aimed at China, “Do not retaliate, and you will be rewarded.”

Wednesday’s rally provided the latest reminder that some of the U.S. stock market’s best days have been clustered around some of its worst days historically. That’s one of the reasons many financial advisers suggest not trying to time the market and selling stocks and other investments meant for the long term when nervous, because of the risk of missing out on such huge up days.

The biggest gain for the S&P 500 since World War II was an 11.6% surge on Oct. 13, 2008, for example. That was during the depths of the Great Recession, when worries were high that the financial system was collapsing and the S&P 500 was in the midst of a nearly 57% plunge from its peak in late 2007 until its bottom in March 2009. A couple of weeks later, the index had another one of its best days in history, soaring 10.8%.

Wednesday’s gains were widespread across the U.S. stock market, and 98% of the stocks in the S&P 500 index rallied.

Leading the way were airlines and other stocks that need customers feeling confident enough to travel for work or for vacation.

Delta Air Lines soared 23.4%. Earlier in the day, it had pulled financial forecasts for 2025 as the trade war scrambles expectations for business and household spending and depresses bookings across the travel sector.