After Donald Trump announced a 90-day pause on higher tariffs, the US stock indexes recorded their biggest one-day gains early Thursday.

In a dramatic turn of events, US President Donald Trump announced a 90-day pause on previously planned higher tariffs on a spectrum of goods from various countries, tapering the pressure on global markets. The move resulted in a surge of optimism on Wall Street, with notable increases across major indices: the S&P 500 leapt by 9.5%, the Nasdaq 100 surged by 12%, and the Dow Jones rallied by an impressive 7.9%. Approximately 30 billion shares exchanged hands - the highest volume recorded according to Bloomberg data, signaling robust trading activity. Trump's announcement came via a post on social media, where he outlined the need for a 'substantially lowered Reciprocal Tariff' of only 10% for the interim period, steering clear of tariffs on China, which he notably increased to 125% in response to China's raised tariffs on US imports. This pause, albeit short-lived, represents a significant shift in Trump's prior aggressive tariff policies intended to rectify perceived trade imbalances. The S&P experienced what has been dubbed its largest intraday reversal—a bottom-to-top swing of nearly 11%—since the financial crisis of 2008. This unprecedented volatility was partly driven by hedge funds racing to cover short positions they had amassed as the market faltered. According to Goldman Sachs, stocks that were heavily shorted saw substantial gains, with a 17.34% increase in its basket of most-shorted stocks outperforming the general market gains. The analysis also revealed that rapid purchases through leveraged exchange-traded funds (ETFs) fueled the market rally, with experts noting that these funds compounded the rise as traders moved to unwind hedges against declining equity prices. High-profile stocks like Nvidia, Delta Air Lines, and Tesla saw impressive gains, with each climbing between 18% and 23%. Meanwhile, the Cboe Volatility Index (VIX), often referred to as Wall Street’s fear gauge, plummeted from 50 to 35, indicating a significant reduction in market anxiety. Despite the optimism, uncertainties linger, particularly regarding China's reaction to the escalated tariffs and the potential for further retaliatory measures. This pause allows other nations, notably India, to renegotiate trade terms without the immediate threat of heightened tariffs. As the situation develops, investors and economists will eagerly monitor how this temporary reprieve might shape future negotiations and broader economic trends. In a broader commentary, one can argue that Trump's tariff approach has been emblematic of a more confrontational style of trade policy, which has left international markets in a state of unease. This recent shift indicates an attempt to balance between protective tariffs and the pressing need for market stability, reflecting the complex and often volatile nature of global trade dynamics.