‘This is a great time to buy’: Tariff pause sparks historic rally

By the day’s end, U.S. stocks staged a historic rally after another Trump post announced a 90-day pause on some tariffs and signaled a willingness to negotiate on trade. Wednesday’s surge added a record $5.1 trillion in value to the market.

The afternoon gains brought welcome relief from turmoil triggered by President Trump’s own shocking announcement of sweeping tariffs a week ago. Still, in the same Truth Social post, he further escalated an economic conflict with China, the world’s second-largest economy. The stock market is still down from where it stood before the April 2 announcement. And the president’s trade war, which has consumed Wall Street’s attention for weeks, appeared far from over.

“I just don’t believe this is an all-clear signal for markets," said Christopher Smart, managing partner of Arbroath Group, a geopolitical risk consulting firm. “There will still be a bumpy road ahead with a lot of uncertainty around tariffs."

All three major stock indexes ended the day with moves unseen since some of the most volatile stretches in recent decades.

The S&P 500 jumped 9.5% on Wednesday, its largest one-day percentage gain since the financial crisis of 2008. The Dow surged more than 2,900 points, or 7.9%—its biggest daily increase ever in point terms and the biggest percentage gain since the coronavirus swept the globe in March 2020. The technology-heavy Nasdaq Composite soared 12.2%, its highest one-day jump since the dot-com era.

Some of the day’s biggest winners were the Magnificent Seven tech stocks that were badly battered during the tariff selloff. Shares of Nvidia rallied 19%, increasing the chip maker’s value by $439.9 billion, the biggest one-day market-cap gain for any company on record, according to Dow Jones Market Data.

Stocks had spent Wednesday morning wavering between gains and losses, as investors fretted about the mounting trade war and watched a troubling selloff in the U.S. government bond market. The president took to Truth Social shortly after the opening bell with an encouraging message: “THIS IS A GREAT TIME TO BUY!!! DJT"

Trump posted again at 1:18 p.m., giving investors a reason to hit the buy button.

“More than 75 Countries," Trump wrote, “have called to negotiate a solution…and haven’t, at my strong suggestion, retaliated in any way, shape, or form."

Because of that, he wrote, “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately."

Trump’s post—along with coordinated messages from Treasury Secretary Scott Bessent and other administration officials—reassured investors who had feared that Trump’s tariffs might become entrenched and usher in a global trade war and recession.

“We need to get the confidence back that tariffs aren’t going to be a permanent fact," said Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.

Many investors have struggled to discern Trump’s primary goal: quickly extract concessions from other countries and declare victory, or build huge protectionist barriers as part of a multiyear quest to restore U.S. manufacturing—an outcome that most economists view as implausible.

With the post, Trump appeared to backpedal from the more extreme version of his trade agenda. He criticized the “lack of respect that China has shown to the World’s Markets" and said that tariffs on Chinese imports would rise to 125%, effective immediately—before signaling a softer stance toward other countries.

In addition to the 90-day pause, Trump said the level of his reciprocal tariffs would now be 10%—for many countries, a much lower level than he had promised at his “Liberation Day" tariff-announcement ceremony on April 2.

He later told reporters that some U.S. companies might be exempted from his tariffs. “We’ll take a look at that," the president said.

Following the S&P 500’s precipitous drop over the past week, the index started Wednesday on the cusp of entering a bear market, defined as a 20% drop from a recent high. Even with the day’s gains, it remains 11% below its record set in February.

Investors were jittery as Wednesday began because of alarming developments in the all-important U.S. Treasury market. Treasurys have been hit with a wave of selling in recent days, causing an increase in yields, which move inversely to their price. At one point during the overnight hours, the 30-year U.S. Treasury hit 5%—a huge jump from below 4.4% last week.

Such selling was unusual because normally investors flock to U.S. government bonds during times of market distress. It prompted speculation that foreign investors might be dumping their Treasurys—a Doomsday scenario that would cast doubt on the U.S.’s status as a global financial superpower.

Bond investors got some relief when a government auction for 10-year Treasury notes on Wednesday afternoon was met with strong demand. That was followed within minutes by Trump’s announcement, which further stabilized longer-term Treasurys. In the end, the 10-year yield settled at 4.41%, while the 30-year yield settled at 4.79%, retreating from their highs for the day.

Still, the dynamics of recent days—which have also included a decline in the dollar—have raised questions about the central role that U.S. Treasurys play in markets, said Erik Weisman, chief economist and portfolio manager at MFS Investment Management.

“The market is trying to figure out, is this just a very gradual kind of decline in the safety of Treasurys…or is this a more wholesale paradigm shift, where you don’t consider Treasurys to be an obvious safe haven?" Weisman said.

Write to Alexander Osipovich at alexo@wsj.com