Stocks bounce back after Trump cools Powell dismissal talk
Wall Street found its footing again Thursday morning after a brief midweek scare sparked by reports that President Donald Trump was considering firing Federal Reserve Chair Jerome Powell. While the markets initially dipped on the news, they largely rebounded once Trump appeared to walk back the threat, calling Powell’s job “safe— unless something criminal happens.”
The S&P 500 futures were flat ahead of the bell Thursday, Dow futures fell slightly by 0.2%, and Nasdaq futures nudged up just under 0.1%, signaling relative calm after Wednesday’s volatility. Market watchers say this reflects cautious optimism that the central bank will maintain its independence despite mounting political pressure.
Trump Criticizes Powell... Again
President Trump’s latest swipe at Fed Chair Jerome Powell had less to do with interest rates—and more to do with office renovations. This week, Trump slammed a $2.5 billion price tag for the Fed’s headquarters overhaul in Washington, calling it “out of control” and pointing fingers at Powell over what he characterized as fiscal waste.
It’s not the first time Trump’s taken aim at Powell. He has long been frustrated with the Fed’s refusal to slash interest rates faster, even with low unemployment and steady growth. But Powell’s made it clear he’s sticking to the data. Especially as inflation stays stubborn and Trump’s own tariffs muddy the outlook.
The situation escalated on Wednesday when several media outlets reported that Trump had spoken privately about removing Powell. The markets didn’t take kindly to that. Stocks slid and the dollar dipped amid fears that the White House was threatening the Fed’s political independence.
Markets Catch Their Breath After Trump Backtracks
By Thursday morning, Trump appeared to ease off the idea of firing Powell, telling reporters that such an action would only be possible in the event of “fraud or criminal activity.” That walk-back helped steady the markets.
Investors are quick to panic at any whiff of political interference in the Fed. Its independence is what gives markets confidence the economic steering wheel isn’t being jerked by short-term politics.
Strong Earnings Offset Political Jitters
Beyond politics, Thursday’s market movement was also driven by early Q2 earnings reports from major U.S. corporations.
PepsiCo shares jumped 2% pre-market after the company beat Wall Street expectations for both revenue and profit.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chipmaker and a key supplier for Nvidia, saw its shares rise 3.4% after posting massive year-over-year profit and revenue gains. Still, the company echoed caution around global trade uncertainty.
United Airlines, however, slipped 1.6% overnight after posting slightly underwhelming revenue and lowering its full-year profit outlook.
Meanwhile, agricultural giants Ingredion and Archer-Daniels-Midland saw sharp drops after Trump publicly claimed that Coca-Cola had agreed to use cane sugar instead of high-fructose corn syrup. A claim Coca-Cola has not yet confirmed.
Global Markets: Mostly Up, With a Few Stutters
Overseas markets were mostly in the green as investors shook off the Powell drama and focused on earnings and economic data. Germany’s DAX rose 0.8%, France’s CAC 40 tacked on 0.9%, and London’s FTSE 100 edged up 0.4%.
In Asia, Tokyo’s Nikkei gained 0.6% despite news of a trade deficit, while Shanghai added 0.4%. Hong Kong’s Hang Seng gave back early gains, closing down 0.1%. Australia’s ASX rose nearly a full point, up 0.9%, and South Korea’s Kospi nudged up 0.2%.
Back in the U.S., oil prices held steady— $66.68 for West Texas crude, $68.58 for Brent. Traders were also bracing for fresh jobs and retail sales data due later Thursday, which could swing the mood heading into the weekend.
Temporary Relief, Lingering Risks
Wall Street bounced back fast, but let’s not pretend the tension’s gone. Powell’s job may be safe this week, but the friction between politics and the Fed isn’t going anywhere.
Inflation’s still sticky. Interest rate direction is murky. And Trump’s next off-the-cuff remark could move markets more than any economic indicator. For now, investors are breathing easier but everyone’s still watching, waiting, and refreshing their feeds.
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