Trump's Tariff Halt Sparks 9% S&P 500 Surge

On a Tuesday morning, former U.S. President Donald Trump posted a message on social media that would significantly impact the stock market. "This is a great time to buy!!!" he wrote, just as the Standard & Poor's 500 Index was on the brink of entering a bear market after four consecutive days of decline, erasing over $6 trillion in value. The sell-off was primarily driven by the implementation of the most severe tariffs on trade partners in over a century.

The root cause of the sell-off was Trump's initiation of a global trade war. This situation gave him a unique opportunity to intervene. Throughout the week, Trump and his advisors had maintained that foreign entities could not evade the tariffs. "My policy will never change," Trump had posted earlier. However, the market's reaction to rumors of a temporary halt to tariffs on Monday suggested that wealthy investors stood to gain over $2 trillion from the market's surge.

During the sharp declines in the Standard & Poor's 500 Index on Monday and Tuesday, Trump had claimed he was not focused on the market, stating that the economy needed to be strengthened. His Treasury Secretary, Steven Mnuchin, also asserted that their attention was on the real economy, not Wall Street. However, Trump's morning post changed the narrative. Within three and a half hours, the rumors of a tariff suspension became a reality. Trump announced the temporary halt of high tariffs on most countries, leading to an immediate and dramatic rise in the stock market. The Standard & Poor's 500 Index surged by over 9%, adding approximately $4.3 trillion in value.

David Wagner, an investment portfolio manager at Aptus Capital Advisors, expressed disbelief at Trump's post, stating, "Is this legal? I don't know, Trump doesn't follow any rules." Wagner noted that Trump's actions had changed the rules of engagement between the market and the presidency. "We should not forget that Trump has said similar things before," Wagner added, highlighting the shifting dynamics between political decisions and market behavior.