Instant View: Stocks rally on Trump's tariff pause, but uncertainty lingers

NEW YORK (Reuters) - Wall Street surged after U.S. President Donald Trump announced a 90-day pause in tariffs unveiled last week that roiled markets and erased trillions of dollars from global stock markets.

The policy changes also include a lowered overall tariff of 10% during that 90-day period, and increase in tariffs on Chinese imports to 125%, from the 104% that went into effect overnight.

MARKET REACTION:

STOCKS: S&P 500 surged 7%, while the Nasdaq jumped more than 9%.

TREASURIES: U.S. Treasury benchmark yields pared gains after the tariff announcement, following a government auction of $39 billion 10-year notes that suggested good demand. The auction came amid a bond market rout that was sparked by the U.S. tariffs and prompted forced selling and a dash for cash.

COMMENTS:

CAROL SCHLEIF, CHIEF MARKET STRATEGIST, BMO PRIVATE WEALTH, MINNEAPOLIS, MINNESOTA

"Markets had been looking for a reason to rally for a few days. Markets can only sustain extreme conditions for so long before exhaustion sets in – rather like a toddler and a tantrum."

"The 90-day suspension does allow nice breathing room to allow negotiation to settle in and market valuations have clearly been reset. Yet, the uncertainty for companies remains."

STEVE SOSNICK, CHIEF MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT

"This was definitely a surprise, considering that the administration consistently said they would not back off the tariffs and that they were non-negotiable. That said, the magnitude of the rally shouldn’t be surprising, considering that we had a similar sized move on Monday after the now-debunked similar tweet. This is a very understandable relief rally."

"We now have to wonder whether the tariffs resume in 90 days or not. That will impede companies’ ability to plan for the near future and to offer guidance regarding the current quarter. Uncertainty is reduced, but not fully dissipated."

JAY HATFIELD, CEO, INFRASTRUCTURE CAPITAL ADVISORS, NEW YORK

"This is going to come as a huge relief to the markets. This is what should have had been done initially anyway, that is, announce that tariffs were going to go up but not do it immediately. We think that the selloff was overdone anyway and nobody was taking into consideration that oil prices are lower and that there are positive things happening too."

"We are now set up for a good rally going into the earnings season. We made a pretty hard bottom anyway so this rally makes sense now. There will be some residual concerns around the broader economy and recession but that will get clearer with more data."

ART HOGAN, INVESTMENT STRATEGIST, B. RILEY WEALTH MANAGEMENT, BOSTON

"The day that felt really nuts was two days ago, when someone on Twitter posted what the White House called a fake news report that Donald Trump was considering doing what now he has just done – halt tariffs for 90 days. That triggered $2 trillion in buying in just eight minutes. Now we have the reality, and it’s not surprise we’re seeing another giant move upward that it’s even hard to track.”

ALEX MORRIS, CHIEF INVESTMENT OFFICER, F/M INVESTMENTS, WASHINGTON, D.C.

“This is a giant meltup, because the announcement was the walkback the market needed to see. They hit the pause button and the market rejoiced. But of course, there is no promise that we’ll manage to solve anything in 90 days. We’re certainly not out of the woods, and we may see inflation data spike if people respond to the ongoing uncertainty by deciding to go out and buy things to hoard in case there are tariffs down the road.

"What convinced the president to act was the bond market, which had begun sending signals that this was going to get steadily worse. The market moves have been an absolute whiplash, with intraday moves of 9, 10, 11 percentage points on major markets. Stocks are trading on tweets and sentiment and the fear of silly policies being enacted. But there is plenty of liquidity and the market structure has held up very well.”

MARK HACKETT, CHIEF MARKET STRATEGIST, NATIONWIDE INVESTMENT MANAGEMENT GROUP, PHILADELPHIA

    "It's definitely good news because it shows that the negotiations are in good enough shape that they think that they've accomplished what they needed to by this initial conversation."

    "But I want to put a pretty big caveat out there because 8% rallies in 20 minutes in the Nasdaq aren't a heck of a lot healthier than 8% declines ... so I'm careful about giving an all-clear right now."

CHRISTOPHER HODGE, CHIEF ECONOMIST FOR THE US, NATIXIS IN NEW YORK 

“We had assumed that some form of capitulation would be forthcoming – the financial carnage, let alone the economic pain that has yet to be felt, and it was inconceivable that the administration to endure for much longer. The decoupling with China looks to be real with no sign of concessions from either side. Will the EU similarly stand firm? The fractures appear to be deep at this point. I think it's fair to say that foreign tariffs may come down a bit where they can via bilateral negotiations."

"We may revert to the Trump 1.0 playbook of foreign countries agreeing to purchase more specific goods from the U.S. This could improve the trade deficit marginally, but will not fundamentally change the trading relationship like the administration desires."

JOHN CANAVAN, LEAD ANALYST, OXFORD ECONOMICS, NEW YORK

"The way President Trump worded this makes it not entirely clear if we actually have a pause or if we just have lower reciprocal tariffs at 10%. But regardless, either way, it's clear that the president is backing off some of the worst of his tariff threats here, and I think that's clearly going to be a net positive for risk assets that can last."

    "One thing that it doesn't do is eliminate uncertainty. The uncertainty is because the level of tariffs just seems to change from day-to-day."

    "This only adds to the broader uncertainty as we go forward. But at least for the time being, while we can't be certain where the tariff situation is going to wind up, we can at least see that the president is showing an increased willingness to back down from the worst of his tariff threats and allow for some calm to enter the markets as things are negotiated."



(Compiled by the Global Finance & Markets Breaking News team; Editing by Lananh Nguyen and Lisa Shumaker)