Confounding! How a rumour on Trump’s tariff policy sparked a 7-minute $2.5 trillion stock rally in US markets

TOI Business Desk / TIMESOFINDIA.COM / Apr 08, 2025, 16:04 IST

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US stock markets briefly surged, adding $2.5 trillion, on a rumor of a potential tariff delay by Trump, highlighting market sensitivity to trade policy. The rally quickly faded as the report proved false, leaving investors uncertain.

Confounding! How a rumour on Trump’s tariff policy sparked a 7-minute $2.5 trillion stock rally in US markets

The incident highlighted the stark contrast in potential outcomes of Trump's international trade policies. (AI image)

It was a $2.5 trillion rally that lasted just 7 minutes - amidst all the global gloom and doom - the US stock markets rallied briefly on Monday. And all because of a rumour that Trump may for now decide not to impose reciprocal tariffs. Investors quickly discounted a false report about US President Donald Trump's supposed 90-day tariff pause and adjusted their trading accordingly.
Subsequently, trading activity stabilised, with investors neither aggressively selling nor buying. The main US indices fluctuated between positive and negative territory throughout Monday's session, reflecting market uncertainty.
This incident highlighted the stark contrast in potential outcomes of Trump's international trade policies. Maintaining current tariffs could potentially trigger economic contraction and push the S&P 500 into bearish territory. Conversely, removing them could stimulate economic growth and drive stocks to new heights.
Also Read | Donald Trump’s reciprocal tariffs send global shockwaves, but India may be among least vulnerable - explained in charts
"There's no question that if Trump woke up tomorrow and said, 'you know what? I'm not doing this' the markets would just move back to a new high," said Ross Gerber, chief executive officer of Gerber Kawasaki Wealth and Investment Management according to a Bloomberg report
Monday's brief rally demonstrated that merely suggesting a tariff implementation delay resulted in a $2.5 trillion US stock market rally..

Investors who withdrew funds during the S&P 500's 10% decline over two days last week faced the risk of missing such significant market recoveries.
Also Read | Is the world staring at a recession? ‘There will be blood�? warn experts on Donald Trump’s reciprocal tariffs impact
However, maintaining tariffs presented a different scenario. Before any possibility of relief emerged, markets were heading towards bear territory, making it challenging to anticipate policy changes.
The situation was further complicated by inconsistent government communications. Various cabinet members suggested ongoing negotiations with 50 to 70 countries, while White House trade adviser Peter Navarro maintained nothing was negotiable.
Trump's own communications added to the uncertainty.
He mentioned on Monday afternoon that permanent tariffs could coexist with negotiations, as certain requirements extend beyond tariff considerations.
The market confusion has left traders perplexed, the Bloomberg report said. Portfolio management has become challenging, as both a panic-driven decline and policy-driven upswing seem equally possible. This situation suggests a need for adjustments in investment behaviour.
Also Read | Warren Buffett defies market trend! World’s 6th richest person gains $12.7 billion in net worth even as other billionaires lose money in crash

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TOI Business Desk

The TOI Business Desk is a vigilant and dedicated team of journalists committed to delivering the latest and most relevant business news from around the world to readers of The Times of India. The primary focus of the TOI Business Desk is to keep a watchful eye on the global business landscape, covering a wide spectrum of industries, markets, economic trends, in-depth analysis, exclusive reports and breaking stories that impact businesses and economies. With a mission to provide valuable insights and updates, the desk ensures that TOI readers are well-informed about the ever-changing and dynamic world of commerce and can navigate the complexities of the business world.

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