Stocks spring higher, dollar gains as Trump announces tariff pause excluding China

The U.S. dollar - which had been lower earlier in the day - strengthened against the yen and other currencies after Trump's announcement, while Treasury yields pared gains after an auction of 10-year Treasury notes saw strong demand.

Trump declared a 90-day pause on many of his new tariffs that he had unveiled initially last week, while raising duties on China.

Trump's announcement of sweeping tariffs late last Wednesday had rattled markets, with stocks selling off sharply in the days following the announcement.

"This was definitely a surprise, considering that the administration consistently said they would not back off the tariffs and that they were non-negotiable," said Steve Sosnick, chief market strategist at Interactive Brokers in Greenwich, Connecticut.

"That said, the magnitude of the rally shouldn’t be surprising..." he said. "This is a very understandable relief rally."

Many investors have been worrying that Trump's wide-ranging tariffs could be severe enough to trigger a recession.

The Dow Jones Industrial Average .DJI rose 2,541.92 points, or 6.73%, to 40,180.98, the S&P 500 .SPX rose 392.26 points, or 7.87%, to 5,375.03 and the Nasdaq Composite .IXIC rose 1,529.03 points, or 10.00%, to 16,794.65.

Stocks had been higher on Wednesday before the announcement, and U.S. indexes added to gains following the Treasury auction.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 33.55 points, or 4.52%, to 776.51.

Against the Japanese yen JPY=, the dollar strengthened 1.25% to 148.08.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 17.1 basis points to 4.431%, from 4.26% late on Tuesday.

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