On Wednesday, US stocks saw a significant increase after former President Donald Trump decided against imposing extensive tariffs on a wide range of trading partners. However, investors and analysts noted that concerns regarding the tariffs would continue to linger.
The S&P 500 experienced a 9.5 percent rise, while the technology-centric Nasdaq Composite surged by 12 percent. These gains marked the most substantial single-day increases since 2008 and 2001, respectively, according to data from FactSet.
Trump’s choice to delay his “reciprocal” tariffs on most countries for a period of 90 days helped mitigate some of the recent drastic declines in equity markets. These declines had been triggered by Trump’s announcement the previous week concerning “liberation day” tariffs.
Andy Brenner, head of international fixed income at NatAlliance Securities, commented that this move by Trump was a concession to the market sentiment and that he maintained tariffs on China to preserve his stance.
Following this announcement on Wednesday, Goldman Sachs quickly altered its forecast, retracting its previous expectations that the US would enter a recession.
Despite this, Trump did increase tariffs on China, the world’s largest exporter, to approximately 125 percent and maintained several other duties, including a universal tariff of 10 percent.
Bob Michele, Chief Investment Officer and head of global fixed income, currency, and commodities at JPMorgan Asset Management, remarked that there was no significant shift in the bond market. He highlighted the ongoing uncertainty and the bond market’s focus on inflation surpassing the Federal Reserve’s target, alongside the Fed’s stance on not reducing rates.
In agreement with this view, Citigroup stated in a note to clients that the suspension of reciprocal tariffs, excluding those on China, does not imply that the US economy will avoid a growth slowdown and inflation increase. The Wall Street bank further indicated that trade uncertainties will remain, and there might be a surge in non-China imports, potentially hindering growth in the second quarter.