U.S. stocks initially fell sharply on worries about President Trump’s tariffs but pared their losses after Mexico said it had negotiated a one-month reprieve.

The S&P 500 was down 0.6% in midday trading after Asian and European indexes logged worse drops. The Dow Jones Industrial Average was down 39 points, or 0.1%, as of 11:45 a.m. Eastern time, and the Nasdaq composite was 1% lower.

Just about everyone thought it was a bluff. Top analysts from the biggest banks on Wall Street said it was highly unlikely. Stocks were trading like it wouldn’t happen. Some companies built contingency plans,