S&P 500 soars 9.5% to one of its biggest gains since WWII after Trump pauses most tariffs

NEW YORK (AP) — Stocks surged to one of their biggest gains since World War II after President Donald Trump paused his tariffs against most other nations, as investors had desperately hoped he would. The S&P 500 soared 9.5% Wednesday. The index is still below where it was when Trump announced his sweeping set of tariffs last week. The Dow Jones Industrial Average flew nearly 3,000 points higher, and the Nasdaq composite jumped 12.2%. Trump, though, did raise tariffs further on China. Treasury yields gave back some of their big market-rattling gains following Trump’s pause on most tariffs.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are soaring on a euphoric Wall Street Wednesday after President Donald Trump said he would back off on most of his tariffs temporarily, as investors had so desperately hoped he would.

The S&P 500 was up 8.3% with less than an hour remaining in trading, heading toward one of its best days in decades. It had been sinking earlier in the day amid worries about whether Trump’s trade war would drag the global economy into a recession. But then came the posting on social media that investors worldwide had been waiting and wishing for.

“I have authorized a 90 day PAUSE,” Trump said, after recognizing the more than 75 countries that he said have been negotiating on trade and had not retaliated against his latest increases in tariffs.

Treasury Secretary Scott Bessent later told reporters that Trump was pausing his so-called ‘reciprocal’ tariffs on most of the country’s biggest trading partners, but maintaining his 10% tariff on nearly all global imports. China was a huge exception, with tariffs going up to 125% against its products.

The Dow Jones Industrial Average shot up to a gain of 2,640 points, or 7%, after erasing an earlier loss of nearly 370 points. The Nasdaq composite was 10.3% higher after earlier climbing as much as 11%, a gain that would count as a good year for the broad stock market.

The relief came for Wall Street after doubts had crept in about whether Trump cared about the financial pain the U.S. stock market was taking because of his tariffs. The S&P 500, the index that sits at the center of many 401(k) accounts, came into the day nearly 19% below its record set less than two months ago.

That came as a surprise to many professional investors, who had long thought that a president who used to crow about records for the Dow under his watch would pull back on policies if they sent markets reeling.

Wednesday’s rally pulled the S&P 500 index away from the edge of what’s called a “bear market.” That’s what professionals call it when a run-of-the-mill drop of 10% for U.S. stocks, which happens every year or so, graduates into a more vicious fall of 20%. The index is now down less than 13% from its record.

Wall Street also got a boost from a relatively smooth auction of U.S. Treasurys in the bond market Wednesday. Earlier jumps in Treasury yields had rattled the market sharply, indicating increasing levels of stress.

Analysts say several reasons could be behind the rise, including hedge funds and other investors having to sell their Treasury bonds to raise cash in order to make up for losses in the stock market. Investors outside the United States may also be selling their U.S. Treasurys because of the trade war. Such actions would push down prices for Treasurys, which in turn would push up their yields.

Regardless of the reasons behind it, higher yields on Treasurys add pressure on the stock market and push upward on rates for mortgages and other loans for U.S. households and businesses.

The moves are particularly notable because U.S. Treasury yields have historically dropped — not risen — during scary times for the market because the bonds are usually seen as some of the safest possible investments. This week’s sharp rise had brought the yield on the 10-year Treasury back to where it was in late February.

After approaching 4.50% in the morning, the 10-year yield pulled back to 4.37% following Trump’s pause and the Treasury’s auction. That’s still up from 4.26% late Tuesday and from just 4.01% at the end of last week.

Of course, the trade war is not over. Bessent and Trump clearly showed their anger at China, the world’s second-largest economy, which has been ratcheting up its own tariffs on U.S. goods and announcing other countermeasures with each move Trump has made.

China earlier said it would raise tariffs on U.S. goods to 84% on Thursday. “If the U.S. insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end” the Ministry of Commerce said.

Later the U.S. Treasury secretary said in a message to countries worldwide, but perhaps most directly aimed at China, “Do not retaliate, and you will be rewarded.”

On Wall Street, the gains were widespread across the U.S. stock market, and 98% of the stocks in the S&P 500 index rallied.

Leading the way were airlines and other stocks that need customers feeling confident enough to travel for work or for vacation.

Delta Air Lines soared 20.2%. Earlier in the day, it had pulled financial forecasts for 2025 as the trade war scrambles expectations for business and household spending and depresses bookings across the travel sector.

In stock markets abroad, indexes tumbled across most of Europe and much of Asia after they closed before Trump’s announcement.

London’s FTSE 100 dropped 2.9%, Tokyo’s Nikkei 225 sank 3.9% and the CAC 40 fell 3.3% in Paris. Chinese stocks were an outlier, and indexes rose 0.7% in Hong Kong and 1.3% in Shanghai.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.