US stock market rises after Donald Trump reveals no intention of firing Fed Chair Jerome Powell

Wall Street responded positively to the de-escalation, with equity index futures surging nearly 2% when trading resumed on Tuesday evening. This came after President Donald Trump stepped back from his threats to dismiss Federal Reserve Chair Jerome Powell, following several days of sharp criticism over the Fed's decision not to lower interest rates.

The Dow Jones soared by more than 1,000 points on Tuesday, with both the S&P 500 and Nasdaq climbing over 2% each.

“I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates,” US President Donald Trump told reporters in the Oval Office on Tuesday.

Stocks, bonds, and the U.S. dollar all declined on Monday after Trump repeatedly criticized Powell over the Easter weekend for not making deeper interest rate cuts since he returned to office in January.

What's behind the rally?

U.S. stocks rallied on Tuesday, largely fueled by developments related to the trade war, as investors sought direction amid the ongoing tensions. White House Press Secretary Karoline Leavitt stated that trade negotiations are progressing, noting that "the ball is moving in the right direction with China." Her remarks came after a Politico report suggested the White House is close to reaching broad trade agreements with Japan and India.

The US stocks received a boost following a Bloomberg report citing Treasury Secretary Scott Bessent's private remarks, in which he stated that the ongoing tariff dispute with China is unsustainable and predicted a likely de-escalation. Additionally, the U.S. President mentioned on Tuesday that the final tariffs on China would be “nowhere near” the 145% rate he had previously proposed.

Meanwhile, the International Monetary Fund significantly cut its global growth projections for this year and the next, cautioning that the outlook may deteriorate further due to the ongoing trade war.

Meanwhile, the International Monetary Fund has sharply reduced its global growth forecasts for both this year and the next, warning that the outlook could worsen further amid the continuing trade war.

Safe-haven assets took a hit on Tuesday, as gold pulled back from its record high and extended its decline into early Wednesday. Meanwhile, short-term Treasuries were sold off due to weak investor interest in a recent auction.

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