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Investing.com-- The S&P 500 rallied sharply Wednesday after President Donald Trump dropped reciprocal tariffs to 10% on countries excluding China for 90-days to allow trade deal negotiations on country by country basis, easing fears about a brewing global trade war.
At 2:08 p.m. ET (19:08 GMT), the Dow Jones Industrial Average rose 2962 points, or 7.9%, while the S&P 500 index rose 9%, and the NASDAQ Composite gained 12%.
Trump announces 90-day pause excluding China; Goldman cools recession call
Trump said he would hike tariffs on China but pause reciprocal tariffs for 90 days for most other countries, who had not retaliated. The reciprocal tariffs that went into affect overnight would be lowered to 10% immediately.
"Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately," Trump said in a social media post after raising tariffs on China to 104% overnight.
China announced earlier Wednesday that it will impose 84% tariffs on U.S. goods from Thursday, up from the 34% previously announced.
Other notable tariffs included a 20% duty on the European Union, 24% on Japan, 46% on Vietnam, 25% on South Korea, and 32% on Taiwan.
More than 75 countries have contacted the U.S. seeking reprieve from tariffs. U.S. Treasury Secretary Scott Bessent said on Monday. During the 90-day interim, the U.S. is expected to negotiation trade deals on a country by country basis.
"The willingness of more than 75 countries to come and negotiate everything they saw last Wednesday was a ceiling and now we have a 10% temporary floor," Bessent added.
The reprieve on tariffs encouraged Goldman Sachs to pull its cool its call on its a recession, reverting to its prior forecast of a 45% chance of recession amid economic growth of about 0.5%.
Traders buy dip in tech following tariff reprieve
Tech led the broader market as investors bought the dip in tech amid easing worries on tariffs as well as improved sentiment on the AI trade.
In a sign that corporate America continues to back the AI trade, Google parent company Alphabet Inc Class A (NASDAQ:GOOGL) reiterated plans to invest $75B on AI technologies despite recent tariff turmoil.
AI-related stocks including NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms Inc (NASDAQ:META), Amazon.com Inc (NASDAQ:AMZN) were sharply higher.
Tesla Inc (NASDAQ:TSLA), meanwhile, was up more than 22% after Benchmark added the stock to its buy list, citing the recent selloff as overdone.
Delta doesn't reaffirm FY guidance
In the corporate sector, Delta Air Lines (NYSE:DAL) stock rose over 23% despite the carrier saying earlier Wednesday that it will not reaffirm its full-year financial guidance, citing uncertainty around the trajectory of U.S. President Donald Trump’s tariff plans.
"Given the lack of economic clarity, it is premature at this time to provide an updated full-year outlook," the carrier said in a statement on Wednesday. Delta noted that it will provide a financial update later in the year "as visibility improves."
Walmart (NYSE:WMT) followed suit, with the retail giant pulling its outlook for operating income in the first quarter, citing uncertainty about the potential impact of sweeping tariffs on China, Vietnam and other key sources of goods across the globe.
Constellation Brands (NYSE:STZ), the owner of beers like Modelo and Pacifico, will release its results after the U.S. close.
(Peter Nurse, Ayushman Ojha contributed to this article.)