The market impact of the "90-day delay rumor": U.S. stocks surged by $2.5 trillion in an instant, but it only lasted for seven minutes

On Monday morning, during the early trading session of the U.S. stock market, investors mistakenly believed that President Trump would suspend tariffs for 90 days, leading to a frenzy of stock price increases. However, the power of this "rumor" lasted only about seven minutes, as people quickly realized it was not true and stopped the rush to buy.

Nevertheless, the market did not fall back into the previous reckless selling state, nor did it plummet like it did last weekend. In the following Monday trading, the U.S. benchmark stock indices fluctuated repeatedly between gains and losses, with market sentiment falling into a sort of paralysis.

According to CCTV News, the sudden surge in the U.S. stock market was due to rumors circulating online about a 90-day suspension of the new U.S. tariff policy. It was verified that Hassett's original words during an interview with Fox News that day were, "The president will make the decisions he needs to make," and he did not explicitly state that "Trump is considering suspending tariffs for 90 days on certain countries." White House Press Secretary Caroline Levitt called this "fake news."

The U.S. stock market experienced a thrilling "roller coaster" ride, with the Dow Jones Industrial Average fluctuating by a record 2,595 points from its intraday low to high, while the S&P 500 index also saw a cumulative drop of over 20% in four days at one point. Subsequently, the Nasdaq managed to close with a slight gain, while the S&P and Dow closed with four consecutive declines.

Media analysis suggests that part of the reason for this episode is that it exposed the highly "binary" outcomes of Trump's global trade war policy: if he maintains the tariffs as he claims, the economy could quickly shrink, and the S&P 500 index would fall into a bear market; but if the tariffs are lifted, the economy could potentially grow again, and the stock market might return to historical highs.

Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, said.

"There is no doubt that if Trump wakes up tomorrow and says, 'You know what? I'm not doing this,' the market would shoot up to new highs."

Trump's "Quantum State" Leaves the Stock Market Flat

Analysts say that Monday's trading indicates that just a rumor about a delay in tariffs was enough to cause the U.S. stock market to surge by $2.5 trillion in an instant. For those investors who withdrew funds after the S&P 500's 10% drop over two days last week, missing out on such a surge is daunting. However, if Trump insists on imposing tariffs, the market was already heading towards a bear market before the rumor spread, making it difficult for investors to boldly bet on a policy shift.

Even more troubling is the mixed signals coming from within the U.S. government: some cabinet members claim to be negotiating with 50 or even 70 countries, while White House trade advisor Navarro stated that "there is no room for negotiation."

Moreover, Trump's own statements have left people puzzled. On Monday afternoon, he said,

"Tariffs can be permanent, and we can also negotiate because besides tariffs, we have other issues to resolve."

This mixed messaging has confused traders. Alec Young, Chief Investment Strategist at Mapsignals, said,

"Usually, I profit from exploiting such market dislocations, but this time is different because the root of the problem is too unique; if this policy is really implemented and lasts for years, it will structurally change the U.S. stock market."This also makes portfolio management exceptionally difficult, as the market may continue to plummet due to panic or miss a rebound due to a shift in policy. Investor behavior patterns may need to be adjusted accordingly, said Brent Schutte, Chief Investment Officer of Northwestern Mutual Wealth Management.

“In the past, the strategy of ‘buying the dip’ has indeed worked, and I believe it will still be useful in the future.”

However, Schutte pointed out that in the current trading market, Trump's policy direction has replaced the Federal Reserve as the most critical variable. He does not expect Trump to release any clear signals in the near term, let alone information as explicit as the Federal Reserve's interest rate decisions.

“The cycle of instant gratification may now be prolonged because the Federal Reserve used to be the ballast of the market, and now they are no longer in a position to actively support the market. I believe there is neither a ‘Federal Reserve put option’ nor a ‘Trump put option’ at this time.”

Traders: Election Crisis May Prompt Trump to Reconsider

However, as the almost sole creator of this market storm, Trump has also given some traders hope: he has the ability to control market volatility.

Rob Conzo, CEO of Wealth Alliance, said:

“This time, it was extreme policies introduced by the government that led to an extreme event. If Trump announces any progress between the countries with the most severe taxation, the market is likely to soar.”

“This is not a systemic issue, but rather a man-made volatility, which gives investors, at least professionals, a bit of comfort. Perhaps this is an opportunity to take advantage of, rather than a moment to panic.”

The political prospects for the Republican Party may also drive a more market-friendly policy shift. Analysts believe that if voters are worried about a recession and see their investment wealth evaporate by 20% in just a few days, Republican seats may be threatened in the 2026 midterm elections.

Alec Young, Chief Investment Strategist at Mapsignals, said,

“If you crash the stock market and push us into a crazy stagflationary recession, you know what? Prices are soaring, and you will be ousted from power.”