Wall Street just had one of its best days since WWII

The S&P 500, an index measuring movements in the U.S. stock market, has recorded one of its largest single-day increases since World War Two (WWII).

It comes after President Donald Trump announced a 90-day pause on ‘reciprocal’ tariffs.

Here’s what you need to know.

Background

The U.S. stock market (Wall Street) is the financial marketplace where shares in public companies are exchanged. It’s made up of different ‘indexes’, which measure the rise and fall in companies’ value. Think of these as baskets filled with various companies.

For example, the S&P 500 tracks the performance of 500 big U.S. companies, while the NASDAQ mainly focuses on technology companies.

Tariffs can affect stock markets because they can cause rising costs, higher prices, and fears of a trade war, fuelling investor uncertainty.

Tariffs

Last week, Trump announced a minimum 10% tariff on all countries’ exports to the U.S.

Displaying a chart of tariffs imposed against the U.S. by other countries, Trump claimed he was applying “reciprocal” tariffs of “approximately half” of that amount in return. China, the European Union, Vietnam, and Thailand were amongst the hardest hit.

After this announcement, the U.S. share market had its two worst days since March 2020, as investors grew uncertain with the state of global trade.

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On Wednesday (local time), Trump announced a 90-day “pause” on the reciprocal tariffs. Ultimately, it means most countries will have their tariffs reduced to the universal rate of 10%.

However, in an escalation of ongoing tensions, the tariff on China will increase to 125%. China responded by escalating its own tariffs on U.S. imports to 84%.

In a post to his social media platform Truth Social, Trump said: “At some point, hopefully in the near future, China will realise that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”

Stock market

Following Trump’s announcement, U.S. markets experienced significant gains.

The S&P 500 rose by 9.5%, its third-best day since 1940.

Prior to Wednesday’s surge, the S&P 500 was close to a “bear market,” where stocks fall 20% or more from a recent high.

Another key index, the NASDAQ, surged by 12%, its best day since 2001. Tech stocks grew significantly, with Tesla jumping 23% and Apple and Meta increasing by 15%.