U.S. stocks surged Wednesday after Donald Trump set backs on plans to hit large trading partners with sudden tariffs, but investors and analysts said uncertainty about their duties continued.
The S&P 500 rose 9.5% on Wednesday, but the high-tech NASDAQ composite increased its highest day since 2008 and 2001 by 12%, respectively, according to FactSet data.
Trump’s decision to suspend his “mutual” tariffs in most countries for 90 days helped to reduce some of the recent significant declines in stocks.
“This is Trump’s surrender to the market. He saved his face by maintaining tariffs on China,” said Andy Brenner, head of international bonds at Natalliance Securities.
Goldman Sachs also rapidly reversed a call for the US to enter a recession following Trump’s announcement on Wednesday.
Still, Trump on Wednesday increased tariffs on China, the world’s largest exporter, to about 125%, and stuck to a series of other taxes, including a universal 10% obligation.
Bob Michele, global bond, currency and commodity chief investment officer at JPMorgan Asset Management and head of global bonds, currencies and commodity, said there was no “significant change” in the bond market.
“There is still a lot of uncertainty, and the bond market is focused on the far higher inflation. [Federal Reserve’s] Target and the Fed say they’re not cutting interest rates,” he added.
In a note to its client, Citigroup reflected that sentiment, saying, “Suspending mutual tariffs except China does not mean that the US economy has avoided growth and increased inflation.”
Wall Street Bank added: “Uncertainty about trade will continue, and imports outside China will skyrocket, potentially attenuating growth in the second quarter.”
