(Bloomberg) — Wall Street has gotten its way for decades, Scott Bessent argued Wednesday morning, declaring “It’s Main Street’s turn.” Then Wall Street had its best day in 16 years.
Hours after the Treasury secretary’s full-throated defense of Donald Trump’s “Liberation Day” tariffs, the president embraced an idea pushed by billionaire hedge funder Bill Ackman: Pause the levies for 90 days, rather than — as Ackman put it — risking a “self-induced, economic nuclear winter.”
For days, Ackman’s proposal had been floating around as a symbol of Wall Street’s waning influence — one of many public pleas from an industry unable to steer Trump away from what it saw as a cataclysm for global markets and everyday people. Then the president pivoted.
“This was brilliantly executed by @realDonaldTrump,” Ackman fired off in response on X. “Textbook, Art of the Deal.”
After a week of grinding their teeth, Wall Street executives have prevailed again, reestablishing their political potency. Trump’s move followed recession warnings from the likes of Jamie Dimon, whose TV appearance early Wednesday was watched by the president, as well as strong words from billionaires Ken Griffin and Stan Druckenmiller.
When Trump abruptly changed course that afternoon, the industry swung from seething to a moment of levity — even if few trust that it will last. Indeed, US stock indexes were down more than 2% on Thursday.
But a day earlier, whoops and laughs erupted on trading floors at Citigroup Inc. (C) and Barclays Plc (BCS) as the S&P 500 (^GSPC) notched its best day since 2008. Some traders bemoaned their misfortune after not buying the dip, while others took relief in the knowledge their personal investment portfolios would jump. The richest people in the world added $304 billion to their combined net worth, the biggest one-day gain in the history of the Bloomberg Billionaires Index.
Goldman Sachs Group Inc. (GS) Chief Executive Officer David Solomon was holed up in a hotel room between calls with worried clients, when he swiveled toward the TV and saw the news that the tariffs were on pause. His first call was to Ashok Varadhan, the bank’s trading chief, to ask how the markets were reacting.
Investors are breathing a sigh of relief, Varadhan replied, according to a person briefed on the discussion. Goldman had just predicted a US recession. After Trump’s announcement, it pulled that call.
Inside another major bank, a memo circulated showing trading volumes in most asset classes ranked as a 9 on a scale of 10.
Yet doubts abound. Many executives quickly reminded their workforces that Trump had merely called a time-out and that the famously mercurial president could again change course any moment. Not to mention, his announcement ratcheted up the US tariff on goods from China to 125%.
When markets closed, one executive quipped that traders wouldn’t be celebrating so much as just drinking — with plenty of tariff chaos still ahead.
Losing Faith
Just months ago, Wall Street was giddy over Trump’s victory, imagining an administration that would cater to its wants and needs — rolling back regulation, unleashing deals and keeping tax rates low.
Sure, Trump could be chaotic, but executives figured they could rely on his fixation with the stock market’s performance, as was the case during his first term. Also reassuring, his Cabinet included investing veteran Bessent at Treasury and Cantor Fitzgerald’s longtime leader, Howard Lutnick, atop the Commerce Department.
Those expectations evaporated as Trump fixated on tariffs.
Not long after last week’s Liberation Day, Wall Street CEOs met with Lutnick and were left fuming. While they sought insight into the new policies, Lutnick offered broad assurances that Trump knew what he was doing, according to people with knowledge of the conversation. Later, at least some of the CEOs derided the commerce secretary to their colleagues.
Meanwhile, Bessent, viewed by the industry as more amenable, was perceived as playing second fiddle in trade conversations. Responding to a question about the tariffs after their unveiling, he replied, “I’m not part of the negotiations.”
One takeaway for the financial industry is that, instead of relying on intermediaries, the best way to reach Trump is on the platforms he watches: TV and social media.
For days, JPMorgan Chase & Co. CEO Dimon resisted requests to go on television to calm markets. Then on Wednesday morning he kept a previously scheduled appearance with Fox Business Network’s Maria Bartiromo and delivered a starkly different message: The market is right to be on edge. The tariffs will hurt borrowers and make recession a “likely outcome,” US banking’s elder statesman said.
Trump initially seemed to brush off the remarks on Truth Social, posting a quote from Dimon that made it look like he was endorsing the policies. But after pausing tariffs, the president praised the banker as a financial genius.
“He was very good,” Trump said outside the White House, noting Dimon had acknowledged the need to address unfair trading relationships.
Bessent was also outside the White House alongside press secretary Karoline Leavitt minutes after the announcement, taking questions from reporters on the pause.
“It was the president’s decision to wait until today,” Bessent said. “As I’ve said in the past, no one creates leverage for himself like President Trump.”
Still, executives across the industry privately credited Ackman and Dimon for helping to sway Trump, even if they weren’t the only voices calling for a more cautious approach.
Advisers to financial and manufacturing companies had been lobbying administration officials in recent days for more time before the tariffs took effect, according to one of those making the pitch. Government representatives had appeared unmoved by the appeals, arguing that Trump had clearly telegraphed his intentions for months, the person said.
‘It’s Been Miserable’
Some executives who felt relieved by Trump’s announcement were also annoyed.
Investor George Seay, a seventh-generation Texan who voted for Trump three times, was losing his patience when the news crossed.
“It’s been a fire drill for a week around here — it’s been miserable,” said the founder and chairman of Annandale Capital, which oversees about $1.5 billion for wealthy people, families and institutions. Some of the firm’s clients were getting “really upset and nervous — and there’s been a lot of anger at Trump.”
The way Seay sees it, the tariffs are a terrible idea. When the pause hit, his thought was that it came a week too late — “but better late than never.”
Then he sat for lunch with his colleagues. Even though they had bought stocks on Thursday, Friday and Monday, they wondered if they should have done even more.
“Nah,” Seay told them. That’s because he thinks the market could wobble again: “We had a bunch of bullets left over to buy even more, but we’re going to sit tight.”
More: Which markets will best weather the continuing tariff uncertainty? Tell us in the latest MLIV Pulse survey.
For some industry veterans, Wall Street’s latest win had a whiff of inevitability.
Jefferies Financial Group Inc. CEO Rich Handler raised the notion over lunch with Mathieu Chabran, the co-founder of Tikehau Capital, at Coco’s at Colette on Fifth Avenue. He saw it as one of two extreme scenarios: Either circuit breakers would trip as investors fled the US or Trump would appear on social media, saving the day and setting off a 15% rally. By the time Chabran’s cold green pea soup and Handler’s French onion arrived, the market was in a historic spike, prompting laughter from the duo.
Bob Diamond, the former Barclays CEO who now runs Atlas Merchant Capital, was in his office in Midtown Manhattan when he heard the news. For a moment, he allowed himself a brag, reminding two colleagues that he, too, had predicted something like this.
Then a grimmer thought set in: “Does this change the fact that we’ve created a different relationship with our closest allies?” he said. “The damage done to the trust and confidence in the United States as an ally and partner has not been fixed.”
—With assistance from Gillian Tan, Dawn Lim, Katherine Burton, Loukia Gyftopoulou, Laura Benitez, Annie Massa, Katherine Doherty, Sonali Basak and Silla Brush.
(Adds Thursday stock moves in the sixth paragraph.)
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