Best Stock Rally Since 2008 Boosts Wall Street: Markets Wrap

(Bloomberg) — Donald Trump’s pledge to pause tariffs on some trading partners ignited the biggest burst of buying Wall Street has seen since 2008.

After narrowly avoiding a bear market, the S&P 500 staged a historic bounce from a selloff that wiped out trillions from global share prices amid the specter of a full-blown trade war that fueled fears of a US recession. The equity benchmark soared 9.5%, the most since the global financial crisis, while the Nasdaq 100 surged 12% as euphoria gripped markets after four days of bruising, high-volume trading. Nearly every stock in major gauges rose.

 

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More than 30 billion shares worth $1.5 trillion changed hands across US stock venues, a record in Bloomberg data going back to 2008.

“It’s been a roller-coaster ride for the past week and we know one thing is for certain: if there’s any certainty in investing, that one certainty is that markets and investors don’t like uncertainty,” said Ryan Nauman at Zephyr. “That’s what we’ve seen — the tariffs have been unpredictable. And now we’re seeing the bounce today, which I think is really a relief rally, buying the dip.”

Treasuries staged a tentative return to normalcy as investors dumped havens on fear of missing out on the great risk rebound. Two-year US yields briefly spiked past 4% as traders pared expectations for Federal Reserve rate cuts this year.

Trump announced a 90-day pause on higher reciprocal tariffs that hit dozens of trade partners after midnight, while raising duties on China to 125%. The market continued to notch new highs on signs he’ll look into tariff exemptions for some companies.

Amid the volatility of previous sessions some market-watchers counseled caution in reading too much into the bull case. Trump’s tariff threats may have damaged the ability of corporate managers to plan for the future and dented international relations to a point where global economic growth remains in lasting doubt.

“The 90-day pause is an encouraging sign that negotiations with most countries have been productive,” said Mark Hackett at Nationwide. “It also injects some much-needed stability into a market rattled by uncertainty. That said, we’re not out of the woods yet. Avoid the temptation to chase momentum and keep emotions in check.”

The recovery in stocks came about three hours after Trump urged Americans to stay calm and continue investing, posting on social media that “this is a great time to buy.” Later, the president said that the bond market is “beautiful right now.” It followed days of mounting market stress in everything from money markets to credit spreads and a chorus of pleas from Trump’s billionaire allies that he pause the implementation of his global tariff program.

US stocks had been at the the most oversold since the depths of the pandemic, and traders were looking for a market bottom.

“I haven’t seen volatility like this in a long time,” said Ellen Hazen at F.L. Putnam Investment Management. “The moves we’re seeing in some stocks are just unbelievable. What this says is that the market was showing oversold conditions. And so any hint of good news was going send the market up.”

While stocks fell Monday and Tuesday, the possibility Trump would pause the most extreme elements of his program may have put a floor under the market in recent days. A fake social-media post saying tariffs were being delayed ignited a 7% bounce in the S&P 500 Monday morning, demonstrating the potential for tariff relief to move the market.

“The tariff clouds parted for the first time today, but it’s too soon to know how sunny the skies will be tomorrow —or 90 days from now,” said Daniel Skelly head of Morgan Stanley’s Wealth Management Market Research & Strategy Team. “As welcome as the announcement was, investors can’t assume it’s the end of the tariff story, or that the market’s day-to-day volatility will disappear.”

To Chris Zaccarelli at Northlight Asset Management, the market is focused on the potential damage – and increased probability of recession – that the breadth and magnitude of the announced tariffs have caused. 

“To the extent that some (or all) of that can be rolled back then the market will price in less of a disaster scenario,” he said. “It is very difficult to trade this market because the news changes on a dime, so it’s best to have a longer-term investment plan in place and take advantage of quality companies trading at a discount, when the opportunity arises,” he said.

Goldman Sachs Group Inc. economists rescinded their forecast for a US recession after Trump announced a 90-day pause on most of his previously-announced tariffs.

“Earlier today, before President Trump’s announcement, we had shifted to a recession baseline in response to the additional country-specific tariffs that went into effect this morning,” the Goldman Sachs team, led by Jan Hatzius, said Wednesday in a note. “We are now reverting to our previous non-recession baseline forecast.”

To Neil Dutta at Renaissance Macro Research, all that has happened is that we have gone from a nonlinear risk to a more linear one. 

“That’s a relief, but this is not a situation where anyone can ring the ‘all-clear’ bell,” he said. “As a result, I would rather be in bonds here than stocks.”

Corporate Highlights:

• Delta Air Lines Inc. withdrew its full-year financial guidance due to uncertainty surrounding global trade, a stark sign of the turmoil rippling across corporate America from President Donald Trump’s tariffs.
• As tariff-spooked shoppers begin pulling back on spending, Walmart Inc. is prepping for a worsening economy by using its massive footprint to keep prices low and hunt for ways to take market share.
• Amazon.com Inc. has canceled orders for multiple products made in China and other Asian countries, according to a document reviewed by Bloomberg and people familiar with the matter, suggesting the company is reducing its exposure to tariffs imposed by President Donald Trump.
• Morgan Stanley is no longer involved in providing financing for KKR & Co.’s purchase of Swedish consumer-health company Karo Healthcare, according to people familiar with the matter.
• Peabody Energy Corp. said it’s reviewing a deal worth up to $3.78 billion to buy Anglo American Plc’s steel-making coal business after a fire at an Australian mine.
• Airbus SE delivered 136 commercial aircraft in the first quarter, enough to edge out Boeing Co. after stepping up its pace of handovers in March
• ThyssenKrupp AG is exploring exit options for its materials trading unit that could be valued at as much as €2 billion ($2.2 billion) in a deal, people familiar with the matter said, as the sprawling industrial conglomerate looks to streamline operations.

Key Events This Week:

• US CPI, jobless claims, Thursday
• Fed’s Michelle Bowman’s nomination hearing in Senate for the position of vice chair for supervision, Thursday
• Fed’s Austan Goolsbee, Patrick Harker, Lorie Logan, Jeff Schmid speak, Thursday
• US PPI, University of Michigan consumer sentiment, Friday
• Major banks reporting earnings include JPMorgan, Bank of New York Mellon, Morgan Stanley, Wells Fargo, Friday
• Fed’s John Williams and Alberto Musalem speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 9.5% as of 4 p.m. New York time
• The Nasdaq 100 rose 12%
• The Dow Jones Industrial Average rose 7.9%
• The MSCI World Index rose 6.3%
• Bloomberg Magnificent 7 Total Return Index rose 14%
• The Russell 2000 Index rose 8.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%
• The euro fell 0.2% to $1.0934
• The British pound rose 0.3% to $1.2800
• The Japanese yen fell 1.1% to 147.90 per dollar

Cryptocurrencies

• Bitcoin rose 6.8% to $82,312.53
• Ether rose 11% to $1,647.34

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.33%
• Germany’s 10-year yield declined four basis points to 2.59%
• Britain’s 10-year yield advanced 17 basis points to 4.78%

Commodities

• West Texas Intermediate crude rose 4.8% to $62.45 a barrel
• Spot gold rose 3.7% to $3,093.53 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Katie Greifeld, Robert Brand, Julien Ponthus, Anand Krishnamoorthy, Winnie Hsu, Ruth Carson, Rob Verdonck and Phil Kuntz.

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