(TJV) Stocks surged and bond yields spiked Wednesday after President Donald Trump signaled a temporary retreat in his escalating trade war, offering Wall Street a moment of relief after weeks of turmoil.

The S&P 500 soared 414 points, or 8.3%, to around 5,397, while the Dow Jones Industrial Average jumped 2,680 points, or 7.1%, to top 40,000 for the first time. The Nasdaq Composite outpaced both, surging 1,608 points, or 10.5%, to 16,876 in mid-afternoon trading.

“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted on his Truth Social. Trump, in the same post, said he was raising the tariff on China higher again to 125%.

According to reporting from USA TODAY, the market rally began shortly after 1 p.m. ET, when Trump announced a 90-day pause on reciprocal tariffs for all countries— not though he simultaneously increased tariffs on Chinese imports to 125%.

A Tumultuous Trade Timeline

Earlier in the day, China had responded to recent U.S. actions by announcing an 84% tariff on U.S. goods, after a fresh wave of American duties took effect at midnight. The European Commission, speaking for the EU, also joined the fray, approving its own set of retaliatory tariffs set to begin April 15.

In a statement shared with USA TODAY, the European Commission condemned the U.S. tariffs as “unjustified and damaging,” warning of harm to both economies and broader global stability.

Markets React to the Shift

Wall Street welcomed the White House’s sudden change in tone. Since Trump’s initial tariff announcement on April 2, the S&P 500 had shed more than $5.83 trillion in market value and had slipped 19% from its recent peak, brushing up against official bear market territory, USA TODAY analysis shows.

The White House announcement helped to ease investor fears, at least temporarily. The CBOE Volatility Index (VIX)—often dubbed Wall Street’s “fear gauge”—fell 31% to 36, after briefly touching its highest level since the COVID-19 panic of 2020.

“VIX levels like this demand a policy response if stocks are to stabilize,” wrote Nicholas Colas, co-founder of DataTrek Research, in a note shared with USA TODAY.

Meanwhile, Bitcoin rose more than 6%, as investors sought alternatives amid market uncertainty.

Bond Market Roils Amid Fiscal Reassessment

The 10-year U.S. Treasury yield rose 13 basis points to 4.39%, extending a sharp bond sell-off. As bond prices fall, yields rise. According to Oxford Economics analyst John Canavan, trading volume in Treasurys was “massive.”

Though some experts have speculated that global investors might begin fleeing U.S. government debt, analysts at Goldman Sachs told USA TODAY that the sell-off seems to reflect fears about rising fiscal risk—not capital flight.

They pointed to the uncomfortable mix of slowing growth and persistent inflation as a key driver of the move.

Fed Eyes Risks, Inflation Pressure Builds

Speaking to Reuters, St. Louis Fed President Alberto Musalem echoed concerns raised in USA TODAY’s reporting. While he doesn’t foresee a full-blown recession, Musalem warned of a slowdown in U.S. economic growth and a likely uptick in unemployment as consumers and businesses absorb higher import costs.

The Federal Reserve’s March meeting minutes, also obtained by USA TODAY, revealed that officials remain worried inflation may remain “persistent.” A consumer price report expected Thursday could shape the central bank’s next move.

Winners and Losers on Wall Street

Despite the broad rally, reactions varied by sector:

• Pharmaceutical stocks were mixed, after Trump warned that new tariffs could hit the industry. Shares of Tonix Pharmaceuticals dropped 10%.

• Delta Air Lines lowered its 2025 outlook, citing trade war disruptions and economic uncertainty. Still, shares jumped 20% in the afternoon rally.

• At an investor event, Walmart reaffirmed first-quarter sales growth of 3–4% but withdrew its profit guidance due to trade-related headwinds. The stock rose 9%.

• Tech stocks roared back, with Apple and Nvidia both climbing around 12% in a rebound from sharp recent losses.