US stocks make a strong comeback: The S&P 500 index recovers losses incurred since Trump's tariff policy, marking a record streak of consecutive gains.

On May 2, 2025, the U.S. stock market rebounded, with the S&P 500 index recovering the losses since President Trump announced a large-scale tariff policy on April 2, and marking the longest streak of consecutive gains since 2004. The market recovery was driven by stabilizing economic data, labor market resilience, and positive developments in U.S.-China trade negotiations. Despite the high uncertainty surrounding the tariff policy, investor sentiment improved, and Wall Street overcame panic.

Trump's "Liberation Day" Tariff Policy Causes Market Turmoil

On April 2, 2025, President Trump announced a 10% baseline tariff on all imported goods and imposed higher rates on countries with significant trade deficits, such as China, Taiwan, and Japan, with rates reaching up to 145%. Trump dubbed this day "Liberation Day," symbolizing America's determination to break free from foreign dependence and rebuild its manufacturing sector. However, the market reacted sharply, with futures for the three major U.S. stock indices dropping sharply. The S&P 500 futures fell nearly 4% at one point, the Dow Jones Industrial Average futures dropped by 2.7%, and the Nasdaq 100 futures plunged 4.7%.

This policy triggered a chain reaction in global financial markets, with Asian and European stock markets suffering significant losses. The VIX volatility index soared to 52, marking a new high since the 2020 pandemic. Both Taiwanese and U.S. stock markets fell by over 10% within the first week of April, and Taiwan's three major retirement funds suffered a monthly loss of NT$219.9 billion.

Labor Market Data and Policy Shift Boost Confidence

Despite the initial pessimistic market reaction, U.S. economic data began to stabilize in late April. According to data released by the U.S. Department of Labor on May 2, non-farm payrolls increased by 177,000 in April, surpassing the market expectation of 138,000, while the unemployment rate remained unchanged at 4.2%. This report demonstrated the resilience of the U.S. labor market, injecting a dose of confidence into the market.

Meanwhile, on April 9, the Trump administration announced a 90-day postponement of the new tariffs for 75 countries that did not retaliate against the U.S., only imposing the 10% baseline rate, and expressed willingness to negotiate with countries like China, Japan, and India. On the same day, China's Ministry of Commerce stated that it was evaluating the U.S. proposal for negotiations and emphasized that "the door is open," provided the U.S. first removes retaliatory tariffs.

Stock Market Strongly Rebounds, S&P 500 Marks 20-Year Longest Winning Streak

Supported by the policy shift and economic data, the U.S. stock market began a strong rebound in mid-April. According to The New York Times, as of May 2, the S&P 500 index had risen for nine consecutive trading days, marking the longest winning streak since 2004, and successfully recovering all losses since April 2. On that day, the S&P 500 rose by 1.5%, the Dow Jones Industrial Average increased by over 500 points, or 1.4%, and the Nasdaq index also rose by about 1.5%.

This rebound not only reflects market expectations for easing trade tensions but also shows that investors' confidence in the fundamentals of the U.S. economy remains intact. Despite mixed earnings reports from tech giants like Apple and Amazon, with Apple warning of a $900 million tariff cost pressure this quarter, the overall market chose to focus on policy relaxation and negotiation opportunities.

Market Sentiment Warms, Risk Assets Rise in Tandem

In addition to the stock market, other risk assets also saw a significant recovery. Bitcoin prices rebounded from early April lows, nearing the $100,000 threshold again; high-yield bond spreads narrowed, and corporate bond issuance surged, indicating a return to stability in capital market liquidity.

According to Bloomberg, although this rebound is supported by policy expectations and hopes for negotiations, there is still underlying unease within the market. For instance, the Cboe Volatility Index (VIX) has retreated from its peak but remains above the six-month average, indicating that investors remain cautious about short-term risks.

US stocks make a strong comeback: The S&P 500 index recovers losses incurred since Trump's tariff policy, marking a record streak of consecutive gains.

Key Updates

In 2025, the first-quarter decline in U.S. GDP triggered market volatility, but robust employment figures and strong tech earnings aided the rebound of U.S. stocks.

Goldman Sachs Report 2025: The Market May Have Hit Bottom, but Three Major Concerns, Including Policy Uncertainty, Are Hindering Recovery

The U.S. April non-farm payroll report beat expectations, leading the stock market to recoup its losses.

Optimism about the resumption of US-China trade negotiations has driven up US stocks, but Morgan Stanley warns of economic risks.

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