Why did the Nasdaq surge 12% after Trump's tariff policy shift?

_{This article was developed in collaboration between IG's editorial team and AI technology}

Indices rocket higher on tariff pause news

US stock markets experienced exceptional gains, with the US 500 (S&P 500) soaring 9.5% and the US Tech 100 (Nasdaq 100) rocketing 12.16% higher, marking a remarkable turnaround. The Wall Street (Dow Jones) also posted an impressive gain of 7.9%.

The rally intensified during afternoon trading following President Trump's announcement of a temporary 90-day suspension of reciprocal tariffs on imports. Instead, a 10% baseline tariff was implemented, alleviating investor concerns that had been mounting since the initial tariff measures were announced just a day earlier.

This surge on Wednesday, April 9, represents the most significant single-day gains for the S&P 500 and Nasdaq 100 since October 2008. The announcement of the tariff pause played a crucial role in reversing the market's direction, as it replaced the more aggressive tariff strategy with a less severe approach, thus calming investor fears and fueling the market's upward momentum.

Market performance in historical context

The day's explosive moves pushed the major indices back toward previous resistance levels:

Index performance

• Nasdaq 100: opened at 15,295, closed at 17,124, +12.16%
• S&P 500: gained 9.5% overall
• Wall Street: gained 7.9% overall

This rally represents one of the largest single-day gains for major US indices in recent years, highlighting a renewed investor confidence and a potential turning point in market dynamics.

Magnificent Seven stocks stage remarkable comeback

The "Magnificent Seven" tech giants – which have disproportionate influence on the major indices – posted substantial gains during the rally.

• Nvidia surged 18.7% on Wednesday, recovering some of their losses after falling 28% year-to-date before the rally. The AI chip leader benefited not only from the tariff news but also from reports that the White House may be backing away from restrictions on its H20 chip sales to China. Inflation concerns had previously weighed on Nvidia, along with worries that major customers like Microsoft and Amazon might reduce AI data center investments in a weakening economy

• Apple 15.3% to $198.85, helping it reclaim its title as the world's most valuable public company with a market capitalisation of $2.99 trillion. The stock had been under significant pressure, dropping 23% over the four previous trading sessions amid concerns about potential tariff impacts on its supply chain

• Microsoft rose 10%, briefly surpassing Apple as the most valuable public company before closing with a market cap of $2.9 trillion

• Tesla jumped 22.7%, driven by a more attractive valuation and potential catalysts from new vehicle launches and self-driving initiatives

• Advanced Micro Devices shares surged 23.8%, fueled by optimism around its AI chips

• Monolithic Power Systems climbed 23.4%, benefiting from the tech sector's rebound

• Microchip Technology led the S&P 500 with a 27.1% gain, as investors flocked back to semiconductor stocks

Historical context and market outlook

This rally marks a potential turning point for the markets, as investors shift focus from recent volatility to growth opportunities. The tech sector's recovery, coupled with hopes for interest rate cuts and a resolution to trade tensions, suggests a promising outlook for the coming months. However, caution remains warranted as markets adjust to new levels and geopolitical uncertainties persist.

Overall, the combination of tariff reprieves, strong fundamentals, and institutional buying power has set the stage for a potential tech-led market revival, with the "Magnificent Seven" at the forefront of this resurgence. As investors navigate this evolving landscape, the focus will be on sustaining momentum and capitalising on emerging opportunities in the tech sector.