President Donald Trump said on Tuesday evening he "never did" intend to fire Fed Chair Jerome Powell, suspending his assault on the central banker's formal independence while still questioning his current position on interest rates. But a broad retreat included more dovish words from the White House on China and tariffs.
The combination fueled huge gaps up for stocks at Wednesday's opening bell and powered an all-around positive day for global financial markets.
Trump told White House reporters on April 22 that he "never did" intend to fire Powell. "The press runs away with things," he said. "No, I have no intention of firing him."
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The president didn't stop there, though: "I would like to see him be a little more active in terms of his idea to lower interest rates." He added, "We think that it's a perfect time to lower the rate, and we would like to see our chairman be early or on time as opposed to late. Late isn't good."
According to The Wall Street Journal, "White House lawyers privately reviewed legal options for attempting to remove Powell, including whether they could do so for 'cause'" during the last week.
Trump backed off after Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick "warned Trump that such a move could trigger far-reaching market chaos and a messy legal fight."
His aides explained as well that firing Powell was unlikely to "lead to any practical change" on monetary policy.
The WSJ is also reporting White House deliberations about "slashing its steep tariffs on Chinese imports – in some cases by more than half – in a bid to de-escalate tensions with Beijing that have roiled global trade and investment."
And China is "open to trade talks with the U.S.," though Beijing says it won't "negotiate under continued threats from the White House."
The yield on the 10-year U.S. Treasury note got as low as 4.259% and closed at 4.387%, down from 4.389% on Tuesday.
The U.S. Dollar Index (DXY) added 0.9%. The basket of six developed-market currencies is down 9.4% from a 52-week high of 110.18 on January 13.
According to Louis Navellier of Navellier & Associates, today's price action represents "a classic relief rally."
"We're far from out of the woods," as Navellier sees it, but "Trump has made it clear that he is not willing to let the market freefall to achieve his goals, creating a kind of Trump 'put' that should keep investors from selling out of fear of a serious recession scenario."
By the closing bell, the blue-chip Dow Jones Industrial Average was up 1.1% at 39,606, the broad-based S&P 500 had gained 1.7% to 5,375, and the tech-heavy Nasdaq Composite was up 2.5% to 16,708.
Mr. Musk leaves Washington
Tesla (TSLA, +5.4%) stock enjoyed a big bounce on Wednesday after Elon Musk said he would scale back his commitment to the Department of Government Efficiency (DOGE).
The electric vehicle maker missed Wall Street expectations for its first-quarter revenue and earnings.
But investors and analysts were more interested in Musk's conference call commentary. The Tesla CEO said that as of May, his "time allocation to DOGE will drop significantly."
Wedbush analyst Dan Ives reiterated his Outperform (or "Buy") rating and raised his 12-month price target to $350 from $315.
"We are raising our price target to reflect this Musk pivot," Ives writes, "and removing some of the black cloud overhang on the stock over the past few months."
CFRA analyst Garrett Nelson changed his rating from Buy to Hold and cut his 12-month price target to $260 from $360.
Nelson's reasoning is more prosaic: "At the top of the list of concerns is our intermediate-term earnings growth expectation: we now believe Tesla's EPS won't rebound to 2023 levels until at least 2027."
Is Boeing out of its graveyard spiral?
Boeing (BA, +6.0%) soared too and was the top-performing Dow Jones stock after the aircraft manufacturer exceeded Wall Street expectations for its first quarter.
Management reported a loss of 49 cents per share on sales of $19.5 billion vs a FactSet-compiled forecast for a loss of $1.21 per share on sales of $19.6 billion.
Boeing said its commercial unit lost $537 million, an improvement from a loss of $1.1 billion a year ago, and that it delivered 130 commercial jets, up from 83.
"We had a really solid quarter of performance across the business," said CEO Kelly Ortberg in remarks prepared for Boeing's conference call, "and I'm pleased to report that our recovery plan is in full swing and showing signs that it's being effective."
Boeing said that Chinese customers account for approximately 10% of its commercial orders.
But Ortberg noted that demand from other parts of the world and an order backlog of more than $500 billion would help it offset the impact of tariffs.
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