U.S. Stocks Surge 2.5% as Trump Eases Tariff Stance, Keeps Powell

U.S. stocks surged on Wednesday, marking the second consecutive day of gains, as investors responded positively to two significant developments. President Trump's shift in tone regarding China tariffs and his assurance that he has no plans to remove Federal Reserve Chair Jerome Powell provided a substantial boost to market sentiment.

Trump's remarks, delivered from the Oval Office on Tuesday, represented a departure from his previous rhetoric. He clarified that he had no intention of firing Powell, although he maintained his stance on the need for more aggressive interest rate cuts by the Fed. This clarification helped to alleviate investor concerns about potential interference with the central bank's independence, which had been heightened by Trump's earlier criticism of Powell, including describing him as a "major loser" on Monday. Last week, Trump had even suggested that Powell's termination could not come soon enough.

The market's reaction was immediate and positive. The S&P 500 and the Nasdaq both saw gains of over 2%, while the Dow Jones Industrial Average added roughly 1,000 points, or over 2.5%. This rally was further supported by reports indicating that tariffs on Chinese imports, initially set at 145%, could be reduced to a range of 50% to 65%. Trump himself hinted at a reduction in tariffs, describing them as "unsustainable" and expecting them to come down "substantially." Additionally, Treasury Secretary Scott Bessent and Vice President JD Vance indicated progress in trade talks with major trading partners, including India.

The market's optimism extended beyond the U.S. President's comments on tariffs and the Fed. There were also signs of progress in trade negotiations with other countries, which further bolstered investor sentiment. This combination of factors created a favorable environment for stocks, leading to a broad-based rally across various sectors.

The rally was also supported by positive developments in the corporate earnings season. Tesla, for instance, saw its stock price increase by 5% after reporting its quarterly earnings. Although the company missed Wall Street estimates, CEO Elon Musk's announcement that he would reduce his involvement with DOGE contributed to the positive market sentiment. Other notable movers included Bitcoin, which extended its gains, and Nvidia, which rose by over 5%.

In summary, the market's sharp rise on Wednesday was driven by President Trump's softened stance on China tariffs and his assurance that he would not remove Fed Chair Jerome Powell. These developments, coupled with signs of progress in trade negotiations and positive corporate earnings, created a favorable environment for stocks, leading to a broad-based rally.