U.S. stocks soared to one of their best days in history on a euphoric Wall Street Wednesday after President Donald Trump said he would back off on most of his tariffs temporarily, as investors had so desperately hoped he would.

The S&P 500 surged 9.5 per cent — an amount that would count as a good year for the market, and the index's third-best day since World War II. The Dow Jones Industrial Average shot up 7.9 per cent. The Nasdaq Composite leaped 12.2 per cent. 

The S&P/TSX Composite Index closed up 1,220.13 points at 23,727.03.

Markets had been sinking earlier in the day on worries that Trump's trade war could drag the global economy into a recession. But then came the posting on social media for which investors worldwide had been waiting and wishing.

"I have authorized a 90-day PAUSE," Trump said, after recognizing the more than 75 countries that he said have been negotiating on trade and had not retaliated against his latest increases in tariffs.

Trump said that because so many countries had "not retaliated" against his latest tariffs, "I have authorized a 90-day pause, and a substantially lowered reciprocal tariff during this period, of 10 per cent, also effective immediately."

 

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Clik here to view.Stocks rally as U.S. pauses some tariffs, raises those on China

 

U.S. President Donald Trump said in a TruthSocial post that he’s pausing so-called ‘reciprocal’ tariffs on many countries for 90 days. He also wrote that he’s increasing tariffs on China. Global stock markets soared in response, though experts warn the U.S. bond market is still troubling.

This doesn't mean the trade war is over, however. The U.S. treasury secretary said in a message to countries worldwide — but perhaps most directly aimed at China: "Do not retaliate, and you will be rewarded."

"I do think that this is a game of 'chicken' in the sense that both sides [China and the U.S.] are upping the barriers," said Peter Andersen, founder of Andersen Capital Management.

"What we're seeing now is a complete correlation between any news related to tariffs and the stock market reactions."

The European Union on Wednesday also approved tariffs affecting $23 billion in U.S. goods in its own retaliatory move.

In stock markets abroad, indexes tumbled across most of Europe and much of Asia after they closed before Trump's announcement. London's FTSE 100 dropped 2.9 per cent, Tokyo's Nikkei 225 sank 3.9 per cent and the CAC 40 fell 3.3 per cent in Paris. Chinese stocks were an outlier, and indexes rose 0.7 per cent in Hong Kong and 1.3 per cent in Shanghai.