S&P 500 Erases Trump Tariff Losses

The S&P 500 has completely recovered its losses from President Donald Trump’s controversial “reciprocal” tariff announcement, marking a remarkable turnaround for U.S. equities after one of the most volatile trading periods since the COVID-19 pandemic as investors grow increasingly optimistic about potential trade deals with key global partners, according to CNBC’s latest market update.

The benchmark index closed at 5,686.67 on Friday, extending its winning streak to nine consecutive sessions—the longest such run since November 2004—as strong corporate earnings and better-than-expected employment data eased recession fears that had gripped Wall Street for much of April following the administration’s aggressive trade policy rollout.

Historic Market Swing

The market’s recovery comes just five weeks after Trump’s April 2 “Liberation Day” tariff announcement triggered a four-day selloff that wiped out more than $2 trillion in market value. Following the introduction of sweeping import duties ranging from 10% to as high as 145% for China, the S&P 500 plunged 12% while the Nasdaq Composite tumbled more than 13% in what many analysts described as panic selling.

“This represents one of the most dramatic market swings we’ve seen in decades,” said Sam Stovall, chief investment strategist at CFRA Research. “The speed of both the decline and subsequent recovery highlights how sensitive today’s market is to trade policy, especially with global supply chains so deeply interconnected.”

Tariff Pause Catalyst

The market’s turnaround began on April 9 when Trump announced a 90-day pause on many of the tariffs for most trading partners except China, triggering the S&P 500’s largest single-day gain since 2008—a stunning 9.52% rally. That historic session saw about 30 billion shares traded, marking the heaviest volume day on Wall Street in records dating back 18 years, according to Nasdaq data.

Following the tariff pause announcement, the European Union responded by halting its own retaliatory measures for 90 days as both sides signaled a willingness to negotiate. However, tensions with China remain elevated, with Beijing vowing to “follow through to the end” in response to the 145% cumulative tariffs now levied on Chinese goods.

Sector Performance

The market recovery has been broad-based but uneven across sectors. Technology stocks, which had been among the hardest hit during the selloff due to their exposure to global supply chains, have led the rebound. The Nasdaq Composite has now also erased its tariff-related losses, settling at 17,977.73 on Friday.

Airlines and travel-related stocks have been standout performers during the recovery, with Delta Air Lines surging 22% on April 9 alone—its best one-day performance since March 2020. Other transportation stocks including United Airlines, Southwest, and JetBlue also posted double-digit gains as fears of a global trade war receded.

Economic Resilience

Friday’s employment report showing 177,000 new jobs in April—better than economists had forecast—has further bolstered investor confidence that the U.S. economy might avoid a recession despite trade uncertainties. The stronger-than-expected labor market has pushed out expectations for Federal Reserve interest rate cuts, with traders now anticipating the first reduction to come in July rather than June.

“A more severe response to the tariff and DOGE shocks may well emerge over the next few months, but the absence of an early start to labor market deterioration makes it less likely that the Fed will have seen enough to cut rates in June,” noted Krishna Guha from Evercore ISI.

Cautious Outlook

Despite the recovery, market strategists remain cautious about potential volatility in the months ahead as the 90-day tariff pause is set to expire in July. Treasury Secretary Scott Bessent has indicated that dozens of countries have reached out to negotiate trade agreements, suggesting a busy period of trade diplomacy ahead.

“While stocks have recovered their losses since the tariff announcement, we’re still not out of the woods,” warned Brad Gerstner, CEO of Altimeter Capital, speaking on CNBC. “Investors should expect continued volatility as trade negotiations unfold, but the medium-term outlook for equities is improving if the administration can secure favorable deals.”

Looking Forward

Attention now shifts to upcoming corporate earnings reports, Federal Reserve policy decisions, and most critically, developments in trade negotiations between the U.S. and its major trading partners during the 90-day window. The market will be particularly focused on talks with China, as the administration has maintained its significantly higher tariff rate on Chinese imports.

For now, investors appear cautiously optimistic about the prospects for de-escalation, with the CBOE Market Volatility Index—often called the “fear index”—retreating from its April highs, though still elevated compared to early 2025 levels. Year to date, the S&P 500 has managed to claw back most of its losses but still remains marginally below its February record high.