U.S. Stocks Surge 9% on False White House Policy Shift

On the evening of April 7, U.S. stocks experienced a dramatic 30-minute rally due to a false report from the White House. The misinformation, which claimed that the White House National Economic Council (NEC) had announced a major policy shift, triggered a wave of buying, pushing stock prices higher. The Dow Jones Industrial Average, which had been down 4.3%, surged to a gain of 2.3%. The S&P 500, which had been down 4.6%, rebounded to a gain of 3.3%. The Nasdaq Composite, which had been down 5%, rallied to a gain of 4.3%. The market's volatility was evident as the three major indices experienced a swing of over 9 percentage points.

Individual stocks also saw significant fluctuations. NVIDIA, which had fallen nearly 8% at one point, later rose nearly 7.5%. Tesla, which had dropped nearly 10% at its lowest point, later climbed nearly 4.5%. The market's reaction to the false report underscored the sensitivity of investors to policy-related news and the potential impact of misinformation on market sentiment.

However, the rally was short-lived. At around 10:14 PM Beijing time, the three major indices and individual stocks began to fall collectively. This was after multiple media outlets reported that the White House had issued a statement refuting the earlier report, calling it "fake news." The White House's official social media account, "Rapid Response 47," also posted three tweets stating that the media's report was "incorrect" and "fake news." The White House Press Secretary, Karoline Leavitt, also retweeted one of these posts.

Upon verification, it was found that the original statement by NEC Director Kevin Hassett was misinterpreted. Hassett's actual words were, "The president (Trump) will make the decision he wants to make," and he did not explicitly state that "Trump is considering suspending tariffs for 90 days on some countries." This clarification from the White House led to a reversal in market sentiment, with the three major indices erasing their gains for the day. The Dow Jones Industrial Average fell 1.5%, while the S&P 500 and Nasdaq Composite fell 1.1% and 0.9%, respectively.

The incident highlighted the importance of verifying information from official sources before making investment decisions. The market's reaction to the false report and subsequent clarification underscored the sensitivity of investors to policy-related news and the potential impact of misinformation on market sentiment. The rapid reversal in market sentiment also highlighted the importance of official communications from the White House in shaping market expectations and investor behavior.

The false report and subsequent clarification also sparked reactions from prominent figures. Richard Branson, the founder of the Virgin Group, wrote on social media that financial markets around the world were in freefall, bringing disastrous consequences to ordinary Americans and people in other countries. He added that as the dollar weakens, consumer prices in the U.S. will rise, and countless small and medium-sized enterprises will go bankrupt or have already gone bankrupt. Branson called on the U.S. government to acknowledge its mistakes and change course, warning that the U.S. would face destruction in the coming years if it did not do so.

Earlier in the day, Bill Ackman, a prominent hedge fund manager who had supported Trump in the 2024 election, also posted on social media that the Trump administration was losing the confidence of global business leaders due to its tariff policies and should suspend the trade war. The incident highlighted the potential impact of policy-related news on market sentiment and investor behavior, as well as the importance of official communications from the White House in shaping market expectations.