Why did Trump suddenly back down?
Because he realized that a trade war would hurt both sides, damaging the economy and market confidence. Starting from April 9, he first paused reciprocal tariffs to stabilize the pace of the trade war. Then on April 22, he publicly denied wanting to fire Federal Reserve Chairman Powell, stabilizing expectations for monetary policy. At the end of April, he openly stated he would not seek re-election in 2028, reducing political uncertainty. These actions lifted market sentiment from the bottom, igniting it from the US-UK agreement to the US-China joint statement. However, it should be noted that in mid-2018, the US and China also issued a similar joint statement, and within days the US reversed course and raised tariffs again. Therefore, although market sentiment is currently high, with risk assets generally bullish and tariff negotiations temporarily paused, there may still be uncertainties ahead. Another reason is that US economic data and corporate earnings reports have been strong. The economic data and corporate earnings released in April performed well, proving that the economy is not as bad as many had imagined, and the likelihood of a short-term recession is decreasing. Additionally, with US corporate earnings surpassing expectations and listed companies reporting impressive results, S&P 500 earnings expectations rebounded from April's low to the year's high, igniting market sentiment. Thus, the easing of tariff policies, strong economic data, and impressive corporate performance have allowed US stocks to directly enter a recovery mode, leading many to believe that the worst may be behind us.