After weeks of pain, the stock market is eyeing some relief from tariffs and fears about Donald Trump’s encroachment on the Federal Reserve.
US stocks soared Wednesday after comments from Trump helped ease two major headwinds for the stock market: steep tariffs on China and the early termination of Federal Reserve Chairman Jerome Powell.
Here’s where major indexes stood at 9:43 a.m. in New York:
The rally midweek adds to Tuesday’s gain, which saw the Dow Jones rise nearly 1,000 points while the S&P 500 and Nasdaq 100 were up over 2%.
Other assets that had been hit by the “sell America” trade in recent days also rose. The moves on Wednesday morning include:
- 10-year Treasury: down 10 basis points to 4.29%
- The dollar index: up 22 basis points to $99.14
- Gold: down 2.9% to $3,320 per ounce
Trump says he won’t fire Jerome Powell
After the market close on Tuesday, Trump said he has “no intention” of firing Powell before his term ends in May 2026.
“I would like to see him be a little more active in terms of his idea to lower interest rates,” the president added. “This is a perfect time to lower interest rates.”
Trump criticized Powell in a string of posts on Truth Social over the past week, arguing that the Fed Chairman should be cutting interest rates now, that he is a “major loser”, and that his “termination cannot come fast enough.”
Last Friday, White House economic advisor Kevin Hassett said that the President and his team “continue to study” the legality of firing Powell before his term ends.
Hassett’s comments and Trump’s posts on Monday sparked a steep sell-off in the stock market on Monday, as investors worried about the Federal Reserve’s independence.
On Tuesday, Trump told reporters, “The press runs away with things.”
Softer tone on China tariffs
When asked about the 145% tariff rate on Chinese imports on Tuesday, Trump said that it would be substantially lower.
The president called those tariffs “very high” and said that they “won’t be that high.”
“No, it won’t be anywhere near that high,” Trump said. “It’ll come down substantially, but it won’t be zero.”
Those comments were reinforced by Treasury Secretary Scott Bessent, who said at a private investment summit hosted by JPMorgan on Tuesday that a trade war with China is not “sustainable” and that he expects “there will be a de-escalation” in the “very near future.”
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Investors cheer Trump’s pivot
Fundstrat’s Tom Lee said perhaps the most important takeaway from Bessent’s comments was that it “underscored that the United States is not aiming to decouple from China.”
“Press Secretary Levitt reinforced the administration’s stance, highlighting ongoing trade discussions with 34 countries and referencing President Trump’s optimistic outlook regarding a potential deal with China,” Lee said in a note to clients on Wednesday.
Economist David Rosenberg said that President Trump “blinked” and that it’s sparking a short-covering rally.
“The blinking that the President is busily doing on trade and Powell has unleashed a follow-through on the short-covering rally,” Rosenberg said in a note on Wednesday.
From a technical perspective, Katie Stockton of Fairlead Strategies said the S&P 500 is “positioned for a bigger relief rally,” highlighting the 50-day moving average of 5,672 as a target, representing upside potential of 7%.
