Markets Surge 8% on False Tariff Pause News

On April 7, a false news post on X, attributed to a verified account impersonating a prominent figure, claimed that the White House was considering a 90-day pause on tariffs. This post, which was not affiliated with any legitimate news outlet, gained traction after it was mistakenly aired as a banner on a major financial news network and subsequently amplified by other sources. The post suggested that the White House was contemplating a tariff pause following an interview with one of Donald Trump’s economic advisers.

The impact of this false information was immediate and substantial. The S&P 500 spiked more than 8% from its low on the day, while the Nasdaq added 9.5% in less than an hour, and the Dow Jones pumped 7%. This surge added trillions to stock markets. Bitcoin prices also saw a similar spike, briefly topping $80,000 before falling back again.

The official White House account quickly debunked the rumor, stating that it was fake news. Following this clarification, markets began to correct, with the initial gains reversing. Despite the debunking, the episode revealed critical insights into the market's behavior. Crypto YouTuber Lark Davis noted that the market is ready to accept prolonged negotiations as long as most deals can be resolved. He also highlighted that the market is prepared to respond positively to even minor developments, such as a 90-day delay in tariffs.

Davis speculated that if multiple deals were made with key players, significant amounts of money on the sidelines would be ready to invest. This suggests that the market is highly sensitive to trade-related news and could experience substantial gains with positive developments. The fake news incident also provided a glimpse into the potential impact of genuine trade negotiations.

The interview with Kevin Hassett, one of Donald Trump’s economic advisers, provided further context. When asked about the possibility of a 90-day tariff pause, Hassett gave a non-committal response, stating that the president would make the final decision. He also downplayed the potential negative effects of tariffs on the economy, emphasizing that any impact would be a small share of GDP.

Following the deletion of the fake news post, Trump took to his social media platform to threaten China with additional tariffs. He stated that if China did not withdraw its 34% increase in tariffs by April 8th, the United States would impose additional tariffs of 50% effective April 9th. This statement underscored the ongoing tensions in trade negotiations and the potential for further escalation.

The episode highlights the market's sensitivity to trade-related news and its readiness to respond positively to developments in negotiations. While the fake news was quickly debunked, it provided valuable insights into the market's behavior and the potential impact of genuine trade agreements. The market's reaction to the fake news suggests that it is prepared to accept prolonged negotiations and could experience significant gains with positive developments.