Markets Rebound Sharply After Trump’s Tariff Turmoil Shakes Wall Street

In the aftermath of President Donald Trump’s sweeping “Liberation Day” tariffs, U.S. markets were sent into a tailspin — only to stage one of the most dramatic comebacks in years.

Following the April 2 announcement, the S&P 500 fell over 12% within a week, rattling investors and raising comparisons to the early pandemic plunge and the 2008 financial crisis. Bond yields also jumped as concerns about U.S. debt obligations surfaced.

“April delivered a massive shock across global markets. The speed of the initial sell-off was historic,” analysts at Deutsche Bank noted in a client report.

However, after Trump softened his stance on April 9, pausing tariffs for countries deemed non-retaliatory, the S&P surged 9.5% in a single day — its biggest daily gain in nearly two decades. Treasury markets calmed, and investor confidence began returning.

Stocks Rally After Presidential Reversal

Although the S&P is still down around 6% from its pre-inauguration high, the rebound has been significant. Blue-chip companies like Apple and Tesla continue to underperform, but broader indices have stabilized. According to Dow Jones, the recent eight-day streak of gains was the best since November 2020. The index also just logged its longest winning streak in two decades.

Roxanna Islam of VettaFi believes the market’s recovery is partly due to investor psychology. “Traders are moving into acceptance mode — tariffs aren’t going away, so they’re adapting,” she said.

Retail Investors Lead the Charge

A large part of the rally appears to be driven by individual investors. According to Vanguard, retail buyers outpaced sellers by nearly 4 to 1 last month, with its flagship ETF pulling in a record $21 billion in inflows.

Steve Sosnick of Interactive Brokers added, “People still believe every market dip is an opportunity. That belief alone can drive markets up.”

Economic Caution Lingers

Despite a positive jobs report, other indicators signal a slowing economy. GDP contracted in Q1, and consumer spending cooled significantly. Companies are issuing cautious outlooks, and uncertainty surrounding future tariff moves remains a key concern.

Bearish sentiment has intensified. The American Association of Individual Investors reports that over 59% of respondents expect stock prices to decline in the next six months — well above the long-term average.

“Negative market sentiment isn’t limited to investors,” said Mark Hamrick of Bankrate. “It affects consumer confidence across the board.”

Additionally, currency and commodity trends point to hesitation. Gold is climbing, the U.S. dollar remains weak, and foreign markets have outperformed American equities since the tariffs were announced.

“Even with better-than-expected data, investors are shifting exposure abroad,” noted Bob Elliott, CEO of Unlimited Funds.

As of now, markets are stable — but fragile. Whether this recovery holds or falters will depend on future trade talks and broader economic data.

The road ahead remains uncertain, but for now, Wall Street is breathing a cautious sigh of relief.