U.S. stocks rose on Wednesday, momentarily halting the aggressive selloff seen in recent sessions, as investors sought opportunities to buy the dip despite growing fears of a global recession driven by escalating trade tensions.
US stocks extend choppy trading
The S&P 500 rebounded above the psychologically significant 5,000 level, while the Dow Jones Industrial Average added roughly 100 points. The Nasdaq 100 outperformed, gaining 1.5%, bolstered by a broad-based rally in large-cap tech stocks. The rebound came even as the broader market remained clouded by uncertainty surrounding the intensifying global trade war.
China announced a dramatic increase in its retaliatory tariffs on U.S. goods to 84%, while expanding its "unreliable entities" list—effectively blocking exports to certain U.S. firms. This followed President Trump's imposition of a cumulative 104% tariff on Chinese imports earlier this week. The European Union also confirmed it would implement tariffs on €21 billion worth of American goods, escalating its own stance as trade relations with the U.S. continue to fray. These developments reinforced recession warnings from economists and market strategists, many of whom are skeptical that the Trump administration is open to pursuing de-escalatory bilateral trade agreements in the near term.
Underlying sentiment remained fragile
Despite the rally, underlying sentiment remained fragile. The recent rout in the bond market—marked by surging yields and foreign selling—continued to weigh on risk assets. Analysts noted that some of the equity gains may have been driven by short-covering or technical buying, rather than a fundamental shift in outlook. There were also growing signs that some institutional investors have begun liquidating equity positions to shore up cash buffers amid heightened volatility and reduced liquidity across fixed-income markets.
Technology led the advance, with semiconductor and AI-focused names outperforming. Nvidia surged 3%, helping lift sentiment across the broader sector. Other mega-cap tech names such as Microsoft and Apple also posted solid gains, offering a degree of resilience amid broader market jitters. However, defensive sectors lagged, and healthcare stocks came under notable pressure after President Trump signaled plans to impose new tariffs on pharmaceutical products and chemical imports. Drugmakers were among the worst performers, with Merck and AbbVie both falling around 3%, as investors braced for possible disruptions in global supply chains and regulatory uncertainty.
Wall Street remains cautious
While Wednesday’s bounce offered temporary relief, many on Wall Street remain cautious, warning that sustained volatility is likely to persist unless there is a meaningful breakthrough on the trade front or a clearer signal from the Federal Reserve regarding its policy path amid conflicting pressures from inflation and slowing growth.
