The U.S. stock market demonstrated remarkable resilience by fully recovering from the sharp decline triggered by President Donald Trump's unexpected trade war escalation on April 2, 2025.
The S&P 500 index rallied 1.5% on Friday, marking its ninth consecutive gain and returning to pre-announcement levels. This recovery came after a dramatic 12% plunge in the index over just four days following Trump's declaration of steep tariffs on most U.S. trading partners.
The market's revival can be attributed to several key factors:
The 90-Day Pause
A major turning point came on April 9 when Trump announced a "90-day PAUSE" on most newly announced tariffs, excluding those on China. This news sparked a remarkable 9.5% surge in the S&P 500, marking one of its strongest single-day performances.
Economic Indicators Remain Strong
Despite weakening consumer confidence due to trade policy uncertainty, concrete economic data remained positive. The April jobs report showed 177,000 new positions added, suggesting underlying economic strength.
Corporate Performance
U.S. companies continued delivering strong financial results, with 75% of S&P 500 firms exceeding profit expectations. Notable tech giants like Microsoft and Meta Platforms helped drive overall earnings growth to nearly 13% year-over-year.
Federal Reserve Stance
The Federal Reserve maintained steady interest rates after implementing three cuts in late 2024, providing stability to markets while monitoring trade policy impacts.
However, market observers remain cautious. While the S&P 500 has recovered its losses, it still sits 7% below its all-time high. CEOs have expressed uncertainty about future performance, with some companies preparing multiple forecasts based on different economic scenarios.
The current market stability hinges on the outcome of ongoing trade negotiations and whether the administration will pursue its original tariff plans when the pause expires in July.