Stocks hit their session lows late morning Wednesday after several news outlets indicated President Donald Trump is seriously considering firing Federal Reserve Chair Jerome Powell. The main indexes quickly stabilized, though, as Trump denied the reports.
The main indexes opened with comfortable gains thanks to encouraging inflation data. According to the Bureau of Labor Statistics, the Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, was unchanged from May to June. Year over year, wholesale prices were up 2.3%.
Core PPI, which excludes volatile food and energy costs, was also flat month to month and 2.5% higher on the year. All the figures were lower than what was seen in May.
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"PPI was considerably cooler than expected in June as lower prices for travel services offset the effect of tariffs," says Bill Adams, chief economist for Comerica Bank.
He notes that while tariffs are raising the prices of goods, this is "being offset by lower prices of nontraded services."
And while Adams believes that the "the inflationary impact of tariffs will likely increase in coming months," the inability of businesses to raise prices too high "may continue to brunt their effect on inflation."
For now, it seems President Trump's tariffs are having a marginal impact on inflation, which all but guarantees that the Fed will hold rates steady at its next policy meeting later this month.
Rumors of a potential Powell ouster swirl
But President Trump would prefer the Federal Reserve to start cutting interest rates as soon as possible – and the central bank's reluctance to do so has sparked a flurry of "Can Trump fire Powell?" headlines.
The latest firestorm erupted mid-morning Wednesday when media reports said President Trump had asked House Republicans on Tuesday evening if he should fire Powell. The New York Times suggested the president had even drafted a letter to remove the Fed chair from his post.
However, speaking to reporters in the Oval Office around lunchtime on Wednesday, Trump said it is "highly unlikely" he'll fire Powell.
The main indexes sold off sharply after the initial reports, but were back in positive territory by the close. The Dow Jones Industrial Average added 0.5% to end at 44,254, the S&P 500 gained 0.3% to 6,263, and the Nasdaq Composite rose 0.3% to 20,730.
Blue-chip earnings roll in
The earnings calendar gave market participants plenty to talk about too. Financial stocks continued to struggle in the wake of their results, with Bank of America (BAC, -0.3%) and Morgan Stanley (MS, -1.3%) closing lower despite Q2 profit beats.
Goldman Sachs Group (GS) was an outlier, adding 0.9% after the big bank reported a 22% year-over-year jump in second-quarter trading revenue.
Goldman's results were "what was expected, especially around the sizable trading beat," says David Wagner, head of equity and portfolio manager at Aptus Capital Advisors.
Wagner adds that the company "has sizable dry powder to either put back into share buybacks or into growth," which should make investors happy.
But Johnson & Johnson (JNJ) emerged as the best Dow Jones stock Wednesday, adding 6.2% after the pharmaceutical giant forecast a $200 million hit from tariffs in 2025 – down from the $400 million it forecast earlier this year.
J&J also beat top- and bottom-line estimates for its second quarter and raised its full-year outlook.
ASML sinks on growth concerns
Elsewhere, ASML (ASML) plunged 8.3%, making it the worst S&P 500 stock Wednesday, after the Dutch chip-equipment maker said that it cannot guarantee growth next year.
"Looking at 2026, we see that our AI customers' fundamentals remain strong. At the same time, we continue to see increasing uncertainty driven by macro-economic and geopolitical developments," said ASML CEO Christophe Fouquet in the earnings release.
Fouquet added that the company is preparing for growth in 2026, but "cannot confirm it at this stage."
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