Why Markets Rocketed Higher
In mid-week trade, stock markets reversed course suddenly when the U.S. reversed course on its tariffs. New tariffs started on Wednesday, April 8, only for Trump to reverse them in less than 24 hours.
The tariff is only a delay of 90 days. Once again, it will bring uncertainty for businesses in that time.
The rally is historic because its strength of nearly double the relative volume is comparable to that seen during the financial crisis.
The tariff reversal is not a win for the U.S., its trade partners, or for China. The increase in tariffs against China is telling other trading partners not to counter tariffs. China is one of the bigger trading partners, so consumers will end up paying more for goods.
Bond markets reversed some of their steep selling in recent days. In the tech sector, Nvidia (NVDA) gained 18.72% and Meta (META) added 14.76%. Tesla (TSLA) gained 22.69%, which is unusual. Higher tariffs against China would increase the cost of Tesla vehicles made in the country.
Banks rallied. JP Morgan (JPM) Citigroup (C), and Bank of America (BAC) rose. Financial institutions benefit when the economy is healthy. Tariffs would slow international trade and would hurt economic activity. That hurts bank deal volumes and fees earned from transactions.
