US stocks surged on Wednesday as markets responded positively to a sharp shift in tone from President Donald Trump on two major fronts: Federal Reserve policy and US-China trade tensions.
The Dow Jones Industrial Average jumped 1,014 points, or 2.4%, while the S&P 500 rose 3%.
The tech-heavy Nasdaq Composite led gains with a 3.9% rally, posting its best single-day performance in weeks.
Shares of Apple and Nvidia, part of the so-called “Magnificent Seven,” rose 3% and 5%, respectively.
Tesla gained 5% after CEO Elon Musk said on the company’s earnings call that he plans to scale back his involvement in the Trump administration’s Department of Government Efficiency, alleviating some investor concerns over leadership distractions.
The market rebound follows weeks of volatility driven by heightened geopolitical risks, a hawkish Fed outlook, and escalating trade tensions.
Investors appear to be recalibrating expectations as the administration signals a willingness to de-escalate both policy disputes and personal conflicts.
Trump changes stance on China, Powell
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President Donald Trump has moderated his tone on both China and Federal Reserve Chair Jerome Powell, signaling a potential shift in the administration’s approach to economic policy amid ongoing market volatility and geopolitical tensions.
In remarks delivered from the Oval Office on Tuesday, Trump said he has “no intention of firing” Powell, despite weeks of public criticism aimed at the central bank chief over interest rate policy.
“I’d just like to see him a little more active on rate cuts,” Trump added, doubling down on his view that the Fed should ease monetary policy to support growth.
The president also adopted a more conciliatory tone on trade with China, stating that while his administration’s tariffs on Chinese imports—currently as high as 145%—will not be eliminated entirely, they “will come down substantially.”
The comment marks a departure from previous hardline rhetoric and suggests a readiness to negotiate a scaled-back trade regime.
Trump said he would be “very nice” in upcoming talks with Beijing, expressing hope for a deal that would ease tensions between the world’s two largest economies.
The president has long defended his aggressive tariff strategy as necessary to restore US manufacturing and reduce reliance on foreign supply chains.
Treasury Secretary Scott Bessent also echoed the softer stance, warning that the trajectory of the trade conflict was “unsustainable.”
He called for a de-escalation, citing economic and political pressures on both sides. “This isn’t a joke,” Bessent said, in reference to the strain on global markets.
The recent market turbulence—including sharp declines in equities, bonds, and the US dollar—has been partially attributed to Trump’s erratic commentary on the Fed.
Last week, he labeled Powell “a major loser,” contributing to a broad selloff before sentiment began to recover on signs of moderation.
Speculation had mounted over whether Trump might attempt to remove Powell from his post.
National Economic Council Director Kevin Hassett said Friday that the president was exploring legal options, though it remains unclear if a sitting president has the authority to dismiss the Fed chair.
Powell, first nominated by Trump in 2017 and reappointed by President Joe Biden in 2021, enjoys statutory protections designed to insulate the Federal Reserve from political interference.
