The S&P 500 had its best day in years on Wednesday, surging an eye-popping 9.5% after President Donald Trump announced a 90-day delay on tariffs for most of America’s trading partners.

For the index, it was the strongest one-day gain since October 2008, during the depths of the global financial crisis. The only comparable moves in recent memory came in March 2020, when the S&P 500 spiked by 9.3% on two separate occasions during the height of the Covid-19 pandemic.

Exchange-traded funds tracking the three major indexes closed much higher on the day: the Vanguard S&P 500 ETF (VOO) surged 9.3% to $99.10, the SPDR Dow Joned Industrial Average etF Trust (DIA) jumped 7.9% to $406.08, and the Invesco QQQ Trust (QQQ) soared 12% to $466.

VOO Avoids Bear Market

The rally followed a steep four-day selloff in which S&P 500-tracking ETFs, such as VOO, plunged more than 12%. From its highs, the S&P 500 was down nearly 19%, just short of bear market territory.

Sentiment was deeply bearish, priming markets for a dramatic rebound on just a whiff of good news.

That news arrived midday Wednesday, when Trump announced he would hike tariffs on China to a whopping 125% but would pause increases for other countries.

Posting on Truth Social , Trump wrote: “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%” for countries that refrained from retaliating against the reciprocal tariffs the administration announced last week.

Trump said the pause would provide space to negotiate bilateral trade agreements, giving hope to investors who feared that the White House was committed to a permanent, across-the-board high-tariff regime. Many worried that Trump’s tariffs were part of a broader effort to restructure the U.S. economy to become more self-sufficient, regardless of economic pain.

Sentiment Shift

But Wednesday’s announcement signaled a potential shift. It showed Trump may be listening to business leaders who have been sounding the alarm about global supply chain disruptions and rising costs.

Still, the trade war is far from over. Trump’s decision to raise tariffs on China remains in place. And unless he reverses course there, too, the U.S. and China may be headed toward a full economic decoupling.

Investors should enjoy the relief rally but stay on high alert.

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