The last week has been hell for investors, but holding firm provides some relief as markets rally most since the 2008. The TPP midweek update

The last week has been hell for investors, but holding firm provides some relief as markets rally most since the 2008.

Source: Bloomberg.

Picking a bottom to a market that is falling as fast as we’ve seen in the last 5 trading days is nearly impossible. It usually comes as the panic hits its peak, and once again, that seems to have been the case. Traders have been beaten up by the market all week, then in one social media post, came relief.

The murmurs spread quietly at first, then exploded into a roar as the news hit, President Donald Trump was pausing the bulk of his tariffs and putting his global trade war on hold. Mostly.

“Is it real?!” said Jonathan Corpina, senior managing partner at Meridian Equity Partners. “I couldn’t believe my eyes. Everything happened so quick.”

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That was the reaction on the floor of the New York Stock Exchange as equities soared 7% in a matter of minutes Wednesday afternoon when news started spreading that Trump was partially halting the higher tariffs that hit dozens of America’s trading partners just after midnight.

“Holy crap!” said Jay Woods, chief global strategist at Freedom Capital Markets, who has worked on the NYSE floor for 35 years. “This was total shock and awe.”

The S&P 500 Index ended the day up 9.5%, its biggest one-day gain since October 2008. The problem with moves this fast is that if you’re not in, then you’ve missed it, and that is very hard for investors to swallow, and it is the reason why at TPP we sometimes have no choice but to ‘buy and hold’. Portfolios cannot risk missing the relief rally.

Wall Street had been practically begging for the reprieve, which is scheduled to last 90 days. Trump, however, had been reluctant to mollify anxious traders, even as the S&P 500 Index plunged after his tariff announcement on April 2, falling 20% from its latest high on Monday and Tuesday.

But by Wednesday, as stocks continued to flip between small gains and losses, it was time for the administration to act. Trump placed a 90-day pause on higher reciprocal tariffs roughly 13 hours after the duties on 56 nations and the European Union went into effect.

“The floor erupted,” Corpina said. “Everyone was shouting, ‘What is it?’ ‘What did Bessent say?’ ‘Are tariffs paused?’ We all started yelling out flashes to each other trying to see if it was real.”

But even as the news hit, trepidation remains. The earlier 10% baseline tariffs remain in place, and Trump is escalating his trade fight with China.

“Crisis averted for now, but what’s next?” Woods said. “Tons of damage has been done in the stock market, and we have a long way to recover.”

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The S&P 500 closed 9.5% higher, and the Nasdaq 100 Index surged 12%. The Dow Jones Industrial Average rallied 7.9%. The Philadelphia Semiconductor Index surged 18.7% and marked the biggest jump on record.

Roughly 30 billion shares traded on US exchanges on Wednesday. That’s the most ever, according to data compiled by Bloomberg going back nearly 17 years.

The S&P 500 notched its biggest bottom-to-top intraday reversal — at nearly 11% — since the height of the global financial crisis in November 2008 and even higher than the Flash Crash in May 2010, according to data compiled by Bloomberg.

Goldman Sachs’s basket of the most-shorted stocks jumped 17.34%, beating the S&P 500’s gain. The move comes as traders rushed to cover short positions they accumulated amid the market downturn. last week, hedge funds registered short bets in US macro products such as indexes and ETFs at the highest weekly volume on record.

“We currently have aggressive covering among hedge funds and long only buying in tech that is ramping with each leg higher in the market,” Goldman Sachs partner John Flood wrote in a note to clients at 2:15 p.m., after Trump announced the pause.

On Tuesday, JPMorgan Chase’s prime brokerage desk warned that a market rally would force hedge funds to cover short positions that have been added “aggressively.”

Fast-money Commodity Trading Advisers, or CTAs, which follow the market direction rather than fundamental factors, also turned into buyers after the S&P 500 hit 5,425. Before Wednesday’s jump, their positioning dropped to the lowest levels since March 2023.

“The Trump put potentially catalysed a massive whipsaw in CTA positioning,” said Daniel Ghali, senior commodity strategist at TD Securities. “Expect CTAs to be forced to buy risk assets, including equity indices.”

Earlier in the session, Trump indicated he was at least paying attention to the market volatility, writing on Truth Social that “this is a great time to buy” and urging Americans to “BE COOL” amid the turbulence.

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European stocks followed Wall Street on Wednesday night, with European Futures rallying sharply after hours.

All have opened higher on Thursday, tracking Wall Street’s late-Wednesday rally. US equity futures have fallen a touch, however, suggesting the euphoria is already dissipating. This is not uncommon, but it also doesn’t mean the buying is over. The volatility will remain, but if stocks can stay off the bottom, then this will provide welcome relief and give the market a chance to gradually recover.

The Stoxx 600 rose more than 7% at open, the biggest intraday gain since 2020, and Asian stocks advanced.

“It’s been a roller-coaster ride for the past week, and we know one thing is for certain: if there’s any certainty in investing, that one certainty is that markets and investors don’t like uncertainty,” said Ryan Nauman at Zephyr. “That’s what we’ve seen — the tariffs have been unpredictable. And now we’re seeing the bounce today, which I think is really a relief rally, buying the dip.”

Treasuries staged a tentative return to normalcy as investors dumped havens on the fear of missing out on the great risk rebound. Two-year US yields briefly spiked past 4% as traders pared expectations for Federal Reserve rate cuts this year.

The FTSE 100 in the UK was up around 4.2% in midmorning trading at 8000. This is still a long way from its all-time high, which it hit only last month!

On the 3^rd March (only 38 days ago), the FTSE hit 8,908, 11.35% higher than where it is trading today. To many of us, it feels like a lifetime ago, and while it might take a while to get back there, history shows us that crises pass and stocks recover.

It goes without saying that past performance is no guarantee of future results, but not panicking has worked for all the previous market routs, and we see no reason why it won’t work again. Trump has found a way to back down, without truly backing down. Hopefully, he will build on this, get countries to the negotiating table, and we can all move on from this madness. Nations now have 90 days to get this done; let’s hope they do. But for now, the cliff edge has been moved away and we can relax, a little.

Disclaimer: The views expressed in this article are the author’s own and should not be considered in rendering any legal, business or financial advice. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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