The S&P 500 Rallies as Investors Grow More Optimistic on Tariff Deals

Published: April 8, 2025 by Omor IE

Key Points

The stock market is staging a recovery rally after a sharp decline in the past few weeks on trade tensions.
Dozens of countries are reportedly reaching out for negotiations.
However, China and Canada have already retaliated, and the EU could also retaliate.

Many analysts expected a “Black Monday” yesterday, but that didn’t end up happening, though Wall Street saw a morning full of back-and-forth swings. Today, the stock market sentiment was also expected to be lukewarm due to escalating trade tensions with China. However, the stock market has turned out to be much more bullish and has started to rally off of its lows.

That’s mainly due to an increase in optimism that the new tariffs will not stick around for long. President Donald Trump and many of his cabinet members have been repeatedly proclaiming that dozens of countries are reaching out to make trade deals in exchange for looser tariffs on their goods.

Here’s a market update as of 10:00 A.M (ET) today.

The S&P 500 is up 181.34 points, or 3.58%.
The Nasdaq Composite is up 624.85 points, or 4%.
Dow Jones Industrial Average is up 1,314.77 points, or 3.47%.

Market Anticipates More Trade Deals

President Donald Trump posed on his Truth Social site right before the market opened that he had a “great call” with the Acting President of South Korea regarding trade. On Monday, Trump talked with the Japanese Prime Minister on tariffs.

Moreover, the South Korean acting president went on an exclusive CNN interview to say that South Korea will not be following China in fighting back against tariffs.

The Secretary of Treasury Scott Bessent said that 70 countries have reached out for trade negotiations with the U.S.

The market has likely rallied today in anticipation of more such trade deals taking place.

The Elephant in the Room

There’s plenty of uncertainty on Wall Street since China has fought back with its own tariffs, and Trump threatened to raise tariffs to 104%. In response, China said that it would “fight to the end” if these tariffs go through.

The EU is reportedly preparing a list of products that it would target in retaliation, and Canada has already retaliated.

The market is unlikely to make a full recovery until these big trading partners negotiate or back down. Wall Street is still looking for more clarity on trade policy.

White House Senior Advisor Hassett said that the administration is prioritizing trading partners and allies for talks and is focused “like a laser beam” on big trading partners that the U.S. has a deficit with. He said his team is getting ready to present a plan to Trump on “who and when” for tariff talks.

Macros

Fitch Ratings lowered the outlook for the U.S. retail and consumer products sector to deteriorating.
U.S. Weekly Bankruptcy Filings jumped to their highest level in five years.
Hedge funds sold ETFs at the second-fastest pace in a decade last week.