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The US stock market has staged a remarkable comeback, with the S&P 500 gaining nearly $8 trillion in market value since its April 8 lows. This marks one of the fastest recoveries in market history. The selloff that preceded the rally was swift and intense.
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Within 22 days, the S&P 500 had entered correction territory, a rare decline that typically takes much longer to manifest. Investors were gripped by fear over President Donald Trump’s trade war and its potential impact on the global economy. However, a pivotal moment came when President Trump paused the so-called “reciprocal tariffs” for 90 days.
This led to a dramatic reversal in market sentiment.
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“The markets had a tantrum and stomped their collective feet and got what they wanted: Trump to back off,” said Ed Yardeni, president of investment advisory Yardeni Research. The tech sector saw particularly pronounced relief.
Following the Trump administration’s announcement, tech giants such as Apple and Amazon surged more than 20%, and Nvidia spiked over 40%. Other sectors, including consumer discretionary, industrials, communication services, and financials, also experienced significant gains.
Market’s swift $8 trillion rally
Despite the rally, concerns remain. US tariffs are still relatively high, with the average effective tariff rate at 17.8%, according to The Budget Lab at Yale. The economic ramifications of these tariffs are still uncertain.
Some investors worry that the stock market rally may be overextended. “The market has raced from oversold to overbought in record time,” said Mark Hackett, chief market strategist at Nationwide. UBS has also downgraded its stance on US stocks from “attractive” to “neutral,” citing anticipated softening economic data.
The sustainability of this rally is still in question. Historically, two-thirds of bear markets since World War II have seen the S&P 500 dip even lower after a recovery from a significant decline. The greatest uncertainty remains President Trump’s evolving trade policies, which could shift with just a single tweet or announcement.
As investors navigate this volatile landscape, only time will tell if the market’s historic comeback has truly marked a turning point or if more turbulence lies ahead. “There is still an awful lot of uncertainty out there. We have to wait and see if this rally has legs,” said Sam Stovall, chief investment strategist at CFRA Research.