President Donald Trump’s decision to pause some of his tariffs created a significant wave of optimism in the stock markets. This announcement, delivered through social media, coincided with a confrontation between major banks and analysts regarding their earnings projections. As a result, the Nasdaq concluded the day with a 12% increase and the S&P 500 rose by over 9%. Individual stocks saw substantial gains, such as Delta Air Lines increasing by 23%, Nvidia rising by more than 18%, and Apple climbing by 15% after recovering from a substantial loss in value following concerns over iPhone pricing.
The stock market’s upbeat reaction followed Trump’s announcement on Truth Social of a tariff pause and reassurances from Treasury Secretary Scott Bessent that the U.S. was not engaged in a trade war. Despite this relief, there remains a looming uncertainty concerning the next 90 days.
Jake Schurmeier, a portfolio manager at Harbor Capital and a former member of the Federal Reserve Bank of New York’s Markets Group, commented on the situation. He mentioned that portfolio managers are trying to predict future negotiations, noting a 90-day reprieve before another potential round of negotiations.
Previously, Trump had announced a range of tariffs during a Rose Garden address, a move that was anticipated by investors. However, the scope of the tariffs exceeded expectations, causing markets to decline in the following days. The prospect of a recession became a topic of discussion, with JPMorgan Chase’s CEO Jamie Dimon publicly stating that a recession was a “likely outcome” of the tariff situation. Trump’s decision to pause tariffs was reportedly influenced by Dimon’s remarks.
After the announcement of the tariff pause, markets experienced a strong recovery, with notable increases in major indices such as the Nasdaq and the S&P 500. Michael Orlando, from the University of Colorado Denver’s J.P. Morgan Center for Commodities and Energy Management, told Fortune that the tariff pause was primarily a relief from the uncertainty affecting equity prices. However, he noted that U.S. Treasuries began to appear risky rather than reliable during this period.
There remains a concern regarding lasting damage from the tariffs and the pervasive economic uncertainty, Schurmeier indicated. He advised that upcoming earnings calls would be crucial in assessing how companies plan to handle tariff concerns and any potential disruptions.
Schurmeier also noted that the present climate offers a good opportunity for businesses to release any bad news during this period. Investment professionals would be closely observing how major banks, led by figures like Dimon, address issues like client responses and M&A activity. While it’s too early to predict loan losses, other insights might reveal stronger business sentiment.
Another major concern is related to China. The next few weeks could focus on retaliation from China after Trump’s decision to increase tariffs to 125%. Trump declined to pause tariffs on China, increasing them instead, citing a lack of respect from China.
Idanna Appio, a portfolio manager at First Eagle Investments, commented on the serious nature of the situation with China, stating concerns about both tariff levels and the potential for a fractured trading relationship between the world’s two largest economies. She questioned whether economic tensions could lead to geopolitical confrontations.
Regarding the broader U.S. economic outlook, Appio commented on the economy’s “very tenuous” state. She included a potential recession in her forecasts due to persistent uncertainties and possible further tariff actions. Appio expressed concern about the possibility of repeating the current scenario in 90 days, describing the situation as a roller coaster ride.
This article was initially published on Fortune.com.
