US actions rose on Wednesday after Donald Trump backed his plans to hit a large number of trading partners with steep tariffs, but investors and analysts said uncertainty about duties would persist.
The S&P 500 jumped 9.5 % on Wednesday, while the technology heavy composite Nasdak jumped 12 %, the best days of 2008 and 2001, respectively, according to FactSet data.
Trump’s decision to pause his “reciprocal” tariffs for most countries for 90 days has helped reduce some of the huge decline in capital in recent days, prompted by Trump’s “Liberation Day” tariff a week ago.
“This is Trump’s capitulation in the markets. He saved his face by maintaining tariffs for China,” said Andy Brenner, head of international fixed revenue in Natalisans.
Goldman Sachs also quickly changed its call for the United States to enter the recession after Trump’s announcement on Wednesday.
However, Trump raised tariffs for China, the world’s largest exporter on Wednesday, to about 125 % and stuck with a series of other taxes, including a 10 percent universal duty.
Bob Michele, chief investment director and head of global fixed income, currency and goods in JPMorgan Asset Management, said there was no “huge change” in the bond market.
“There is still a lot of uncertainty there. The bond market is focused on inflation that goes above the target (Federal Reserve) and the Fed tells us they are not lowering rates,” he added.
Citigroup repeated that feeling, saying that in the client’s note: “Pausing reciprocal tariffs with the exception of China does not mean that the US economy has avoided slowing the growth and growth of inflation.”
The Wall Street bank added: “The uncertainty about trade will exist and the import of non-Chinese can now increase, amortizing growth in the second quarter.”
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