In a week where “tariff” became Wall Street’s most traded word, the markets finally caught a break. President Donald Trump’s surprise announcement Wednesday of a 90-day pause on new tariff increases (except for China) triggered one of the largest single-day rallies in years. The Dow Jones surged nearly 2,900 points, the S&P 500 soared 4.6%, and tech giants staged a comeback of historic proportions.
Now, with all eyes on Friday’s close, traders on prediction platform Kalshi are looking for the next move — and putting real money behind it.
Early in the day, the S&P 500 daily range market forecasted a 55% chance of reaching over 5,450. But with volatility still fresh in investors’ minds, the spread of wagers has been unusually wide throughout the day. The markets remained uncertain heading into the CPI data release on Thursday and another potential Trump policy announcement.
Prediction markets’ ability to hedge against uncertainties like these are making them increasingly popular hedging tools. Several economic prediction markets are now featured on Robinhood as well.
Why the rally and the uncertainty?
Wednesday’s rally was driven by a dramatic about-face from the White House. After weeks of teasing aggressive trade moves, Trump announced a 90-day pause on his universal 10% tariff rate, except on China. The decision came just minutes after a surprisingly strong 10-year bond auction amid mounting pressure from the bond market.
The sudden reversal sparked a buying frenzy. Tesla jumped 22.7%, Amazon was up 12%, and Nvidia surged by 19%. Still, traders are not convinced the good vibes will last through the week.
“I think you need certainty,” Mohamed El-Erian, Allianz’s chief economic advisor, said Wednesday on CNBC’s Closing Bell. “I think the 90 days, that’s a good period, but quickly people are going to start asking what happens next.”
Kalshi market focus: “S&P price range at 4pm EDT”
On Thursday, Kalshi traders had the S&P price market at a 55% chance it would push above 5,450. Nearing the market’s close, the highest percentage was on 5,225 or above (60%). In uncertain times, it’s expected for this market to fluctuate drastically and move quickly.
These daily markets often open with fresh enthusiasm, so it’s worth paying attention to the long term trend. However, this could be a useful hedge against the volatile market.
The case for a pullback
- With Trump’s messaging evolving by the hour, any retraction or clarification on the tariff pause could spark another selloff.
- The 10-year Treasury yield closed at 4.32%, and many investors remain nervous about liquidity conditions.
The case for a continued rally
- Stocks like AMD (+24%), Apple (+15%), and Meta (+15%) are rebounding from steep drawdowns, attracting dip buyers.
- A relief rally. A 90-day pause gives breathing room for global supply chains and importers — and potentially keeps rate hikes off the table.
Kalshi’s Daily S&P price range market allows traders to position around where the S&P 500 will land at the end of each trading day. Unlike traditional options, the payout is binary, either it hits the range or it doesn’t. The tool is becoming increasingly popular for short-term macro bets.
With so much volatility compressed into a single week, and with political risk bleeding into market sentiment, every day’s close this week and beyond might say more about investor psychology than fundamentals.
One thing is certain: If the market has a mind of its own, prediction traders are listening.
