TLDR
- Trump softened stance on Fed Chair Powell, stating “no intention” of firing him, which boosted market futures
- US stock futures jumped Wednesday with Dow up 1.7%, S&P 500 up 2.3%, and Nasdaq up 2.8%
- Trump indicated China tariffs would be scaled back “substantially,” easing Wall Street concerns
- Tech companies face uncertainty as earnings season begins amid tariff concerns
- Bitcoin extended gains past $93,000 and Tesla stock jumped despite missing earnings estimates
U.S. stock futures jumped Wednesday after President Trump eased investor concerns by stating he has “no intention” of firing Federal Reserve Chair Jerome Powell and hinting at reducing proposed tariffs on Chinese imports. The comments marked a clear shift in tone from the president, who had previously called Powell a “major loser” and criticized the Fed’s interest rate policies.
Futures attached to the Dow Jones Industrial Average rose 1.7%, gaining nearly 700 points. S&P 500 futures jumped 2.3%, while tech-heavy Nasdaq Composite futures soared 2.8%. The market reaction highlighted Wall Street’s relief following days of uncertainty about the central bank’s independence and escalating trade tensions.
Trump told reporters from the Oval Office on Tuesday that he “never did” intend to remove Powell, though he still wants the Fed chair to cut interest rates. “I would like to see him be a little more active in terms of his idea to lower interest rates,” the president said.
Trade War Concerns Ease
In addition to softening his stance on Powell, Trump provided hope for easing trade tensions, particularly with China. The president said he expects tariffs on Chinese goods to come down “substantially,” a statement backed by Treasury Secretary Scott Bessent, who called the current tariff levels “unsustainable.”
Vice President JD Vance also reported progress in trade talks with India. These comments suggest the administration may be willing to negotiate rather than push forward with all proposed tariffs, which had caused market turbulence in recent weeks.
The tech sector, which had been hit hard by tariff concerns, showed signs of recovery. The Nasdaq Composite has dropped 16% this year, but investors appeared more optimistic following Trump’s comments.
Companies and investors have struggled to keep up with rapidly changing headlines about tariffs. Initially, President Trump placed hefty reciprocal tariffs on goods from various countries. He later temporarily delayed some levies while raising tariffs on China, with temporary exemptions for certain tech products like semiconductors and laptops.
Tech Earnings Under Scrutiny
Major tech companies are preparing to report quarterly earnings amid this uncertain environment. ServiceNow, IBM, and Alphabet lead this week, with Meta Platforms, Microsoft, Amazon, and Apple expected to report next week.
Industry analysts suggest companies may struggle to provide clear financial guidance. “I would expect most of these companies to try to kick the can down the road and say, ‘We don’t knowāwe haven’t seen anything yetālet’s see what happens,'” D.A. Davidson tech analyst Gil Luria said.
Some companies outside the tech sector have already adjusted their outlooks. Delta Air Lines scrapped its full-year forecast earlier this month, while Kimberly-Clark cut its guidance on Tuesday, citing “potential incremental costs from a more uncertain geopolitical landscape.”
The tariff situation creates risks for both consumer and enterprise spending. As companies raise prices to offset increased costs, consumers may reduce spending on non-essential items, affecting companies like Amazon.
Even companies with temporary tariff exemptions, such as Apple, could see reduced sales if overall consumer spending declines. Additionally, advertising and software spending might decrease if enterprises cut costs in a slowing economy, potentially hurting companies like Meta.
Despite these concerns, tech giants have committed to massive capital expenditures for artificial intelligence this year. Alphabet pledged $75 billion, Microsoft plans to invest about $80 billion, and Amazon is on track to spend more than $100 billion.
Analysts believe it’s too early for these companies to cut AI spending estimates, as the long-term goal of winning the AI race remains a priority. However, they may not raise these estimates in the near term given the uncertain environment.
Among individual stocks, Tesla jumped Wednesday despite missing Wall Street earnings estimates. The electric vehicle maker’s shares rose after CEO Elon Musk revealed he would “significantly” reduce the time he spends on DOGE.
Bitcoin also performed well, extending gains past $93,000. Nvidia rose over 4% on Wednesday, showing resilience in the semiconductor sector despite broader market concerns.
Corporate earnings season continues with results due from Boeing, Chipotle, IBM, and AT&T, giving investors more data points to assess the economic impact of recent policy shifts.
The coming weeks will be crucial for determining whether Trump’s softer stance on tariffs and the Fed translates into concrete policy changes that could support continued market recovery.
