[New York Stock Market] 24-Year Rally on US Mutual Tariff Suspension... S&P Up 10%, Nasdaq Soars 12% (Comprehensive)

Trump Suspends Reciprocal Tariffs by Country for 90 Days
China Tariffs Raised to 125% and Immediately Enforced
Tariff War Front Narrows to China, Easing Trade War Concerns
S&P Posts Biggest Rally in 17 Years, Nasdaq in 24 Years
Tech Stocks Soar: Tesla Up 23%, Nvidia Up 19%
Tariff Uncertainty Expected to Keep Market Volatile

The New York stock market surged sharply on the 9th (local time) following U.S. President Donald Trump's sudden decision to suspend reciprocal tariffs by country. Concerns over a tariff-triggered global trade war were temporarily eased, triggering a buying frenzy. The S&P 500 index and the Nasdaq index posted record rallies not seen in 17 and 24 years, respectively.

AFP Yonhap News

On that day at the New York stock market, the blue-chip-focused Dow Jones Industrial Average (Dow) closed at 40,608.45, soaring 2,962.86 points (7.87%) from the previous trading day. This was the largest gain in 4 years and 11 months since May 2020. The large-cap-focused S&P 500 index jumped 474.13 points (9.52%) to 5,456.9, and the tech-heavy Nasdaq index skyrocketed 1,857.06 points (12.16%) to close at 17,124.97. The daily gains of the S&P 500 and Nasdaq were the largest in 17 years and 24 years, respectively, since October 2008 and January 2001.

President Trump's sudden suspension of reciprocal tariffs was the catalyst for the stock market surge. That afternoon, through his social media platform Truth Social, he announced that tariffs on China, which retaliated against the U.S., would be raised to a total of 125% and immediately enforced, while reciprocal tariffs on other countries with whom the U.S. is willing to negotiate would be suspended for 90 days. This came about 13 hours after the full enforcement of reciprocal tariffs at midnight that day.

President Trump explained the background of the measure, saying, "China does not respect the global market at all," and "More than 75 other countries have contacted us to discuss trade, trade barriers, tariffs, currency manipulation, and non-monetary (non-tariff) tariffs." U.S. Treasury Secretary Scott Vestin also stated that this measure was intended to buy time for tariff negotiations with various countries, raising expectations for talks.

Previously, the U.S. imposed reciprocal tariffs of '10% + α' on all trading partners worldwide. After implementing a basic 10% tariff on the 5th, starting just after midnight on the 9th, additional punitive tariffs ('+ α') were enforced considering country-specific tariffs and non-tariff barriers. However, President Trump decided to impose only the basic 10% tariff on countries other than China and suspend the '+ α' tariffs for three months, less than a day after the full enforcement of reciprocal tariffs.

This move narrowed the tariff war front to China, easing some concerns about a global trade war. Some interpret this as President Trump retreating after the recent tariff policies caused the New York stock market to plummet and increased fears of inflation and recession within the U.S. The appointment of Treasury Secretary Scott Vestin, a Wall Street veteran who has maintained a flexible tariff policy stance, as the chief negotiator instead of Peter Navarro, the White House trade and manufacturing advisor known as a 'tariff hawk,' and Commerce Secretary Howard Lutnick, also supports this interpretation. On the morning of the same day, President Trump posted on Truth Social, "Everything will be fine, and America will be bigger and better than ever," adding, "Now is a very good time to buy (stocks)."

Adam Crisafulli, founder of Vital Knowledge, analyzed, "Considering how suppressed stock prices and investor sentiment were, the 90-day tariff suspension is triggering a sharp rebound," and added, "By delaying tariff implementation, market obstacles can definitely be removed."

However, Wall Street forecasts that stock market volatility will continue as tariff uncertainties have not been completely resolved. There are considerable concerns that the U.S.-China trade war could escalate into a chicken game as China has warned of a tough response. The European Union (EU), Canada, and others have also reaffirmed their retaliatory policies alongside negotiations, meaning the spark for a tariff war could ignite at any time.

Sam Stovall, Chief Investment Strategist at CFRA Research, said, "At least a short-term rally is possible, but it does not seem that the stock market has bottomed out," adding, "If you get fooled once, it's their fault; if you get fooled five times, it's your fault."

Founder Crisafulli also stated, "Tariffs will not disappear," and "The average tariff rate on China is in the triple digits, and no one knows what will happen after this 90-day tariff suspension ends."

By stock, large technology companies surged. U.S. electric vehicle maker Tesla soared 22.69%. Nvidia jumped 18.72%, and Apple surged 15.33%. Microsoft (MS) rose 10.13%, while Alphabet, Google's parent company, and Meta, Facebook's parent company, climbed 9.88% and 14.76%, respectively. U.S. automakers General Motors (GM) and Ford rose 7.67% and 9.32%, respectively.

U.S. Treasury bonds, considered the world's safest assets, continued to see selling pressure, pushing yields higher. The yield on the 10-year U.S. Treasury, a global bond yield benchmark, rose 8 basis points (1bp = 0.01 percentage points) to 4.34%, while the 2-year Treasury yield, sensitive to monetary policy, increased 13 basis points to 3.87%. Investors typically sell risky assets like stocks and buy safe assets like government bonds during times of uncertainty, but recently, an unusual bond sell-off has occurred, causing bond yields to rise inversely to bond prices. There are observations that China is massively selling U.S. Treasuries as a retaliatory measure against the U.S.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, plunged 35.75% from the previous day to 33.62.