US stocks skyrocket, see record biggest one-day gains after Donald Trump's tariff pause
Shares of Nvidia Corp. soared 18.03%, Delta Air Lines Inc. jumped 23.38%, Advanced Micro Devices added 23.82% and Tesla Inc. rallied 22.69%
After Donald Trump announced a 90-day pause on higher tariffs, the US stock indexes recorded their biggest one-day gains early Thursday.
According to a Bloomberg report, the S&P 500 closed 9.5% higher, and the Nasdaq 100 Index surged 12%. The Dow Jones Industrial Average rallied 7.9%.
About 30 billion shares were traded on the day, the highest according to the data compiled by Bloomberg.
“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted Wednesday on social media.
However, the pause does not include tariffs on China, which the White House raised to 125% after the Asian nation retaliated earlier in the day with an 84% levy on US imports.
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S&P's biggest gain since global financial crisis in 2008
The S&P witnessed its biggest bottom-to-top intraday reversal — at nearly 11%, since the height of the global financial crisis in November 2008 and even higher than the Flash Crash in May 2010, the report added.
The report added that Goldman Sachs Group Inc.’s basket of the most-shorted stocks jumped 17.34%, beating the S&P 500’s gain.
The move comes as traders rushed to cover short positions they accumulated amid the market downturn. Last week, hedge funds registered short bets in US macro products such as indexes and ETFs at the highest weekly volume on record.
“We currently have aggressive covering among hedge funds and long only buying in tech that is ramping with each leg higher in the market,” Goldman Sachs Group Inc. partner John Flood wrote in a note to clients following Trump's announcement.
On Tuesday, JPMorgan Chase & Co.’s prime brokerage desk had warned that a market rally would force hedge funds to cover short positions that have been added “aggressively.”
Rapid stock buying by leveraged exchange-traded funds also contributed to the velocity of the move.
“Levered ETFs mechanically adding long equity exposure supercharged the rally,” according to Daniel Kirsch, head of options for the brokerage Piper Sandler & Co. He said traders moved quickly to unwind downside hedges, contributing to the move.
Shares of Nvidia Corp. soared 18.03%, Delta Air Lines Inc. jumped 23.38%, Advanced Micro Devices added 23.82% and Tesla Inc. rallied 22.69%. Wall Street’s so-called fear gauge, the Cboe Volatility Index, or VIX collapsed to 35 from 50.
