Dow soars over 1000 points, Nasdaq rallies over 4% as Trump softens stance on Fed chair, China tariffs

US stocks kicked off Wednesday’s trading session with a powerful rally, fuelled by renewed investor optimism after key political developments helped ease recent market tensions.Following weeks of volatility driven by concerns over interest rates, central bank independence, and global trade, Wall Street welcomed signs of stability from Washington.
Markets surged after President Donald Trump backed off threats to fire Federal Reserve Chair Jerome Powell and suggested a potential thaw in the trade standoff with China. Trump’s more measured comments came as a relief to investors worried about policy uncertainty and its potential impact on the broader economy.
By 9:49 AM ET, the Dow Jones Industrial Average had surged 1,048.76 points, or 2.68%, to 40,235.74. The Nasdaq Composite soared 675.65 points, or 4.14%, to 16,976.07, leading the charge thanks to strong rebounds in major technology names. The S&P 500 followed suit, up 172.46 points, or 3.26%, to 5,460.22.
The continued rally came amid growing optimism that recent tensions between the White House and the Federal Reserve may ease, and that trade talks with China could resume with less friction. Tech stocks, in particular, appeared to benefit from a combination of regulatory clarity and investor rotation back into growth assets.
Risk appetite surged while safe-haven assets declined. Gold dropped sharply by 3.51% to $3,299.50 per ounce, reflecting a shift in investor sentiment. Oil held mostly steady, down just 0.11% at $63.60 a barrel.
In bond markets, the yield on the US 10-year Treasury slipped to 4.311%, down 7.8 basis points, suggesting continued demand for fixed-income assets even amid the stock market rally.
The VIX, a key gauge of market volatility, dropped 9.06% to 27.80, indicating that investor anxiety was easing significantly as equities climbed. Meanwhile, the euro slipped slightly against the US dollar, with the EUR/USD pair down 0.152% to 1.136.
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Meanwhile, Global markets including US markets future opened with strong gains Wednesday after President Donald Trump said he had no plans to fire Federal Reserve Chair Jerome Powell, easing concerns over political interference in the central bank.
Futures for the Dow Jones Industrial Average had jumped 1.9% ahead of the open, while S&P 500 futures rose 2.6% and Nasdaq futures climbed 3%.
Trump, frustrated that the Fed was not cutting interest rates aggressively enough, previously suggested he could remove Powell. But on Tuesday, he told reporters, “I had no intention of firing him.”
The president had been pressuring the Fed to lower its benchmark interest rate to help boost economic growth. However, Powell and other central bank officials signaled a more cautious stance, citing economic uncertainty driven in part by Trump’s own tariffs and persistent inflation above the Fed’s 2% target.
Most legal scholars agreed that Trump could not remove Powell from the Fed’s board of governors, and there was no legal precedent for firing a Fed chair. The legality of removing him as chair specifically remained murky.
Markets also reacted positively to comments from US Treasury Secretary Scott Bessent, who said the ongoing trade war with China was “unsustainable” and predicted a “de-escalation” in tensions. His remarks added to hopes of a more stable trade environment.
“Markets clearly followed every shift in tone from the White House on trade policy,” said Tim Waterer, chief market analyst at KCM Trade. “Investors saw these developments as a sign of reduced risk in the near term.”
Despite the day’s rally, analysts cautioned that markets would likely remain volatile, swinging with investor sentiment around potential trade deals and the possibility of further economic slowdown.
Tesla shares rebounded sharply, rising 7% in early trading after CEO Elon Musk promised to spend less time in Washington and more time focused on the company. The announcement came shortly after Tesla reported a steep drop in quarterly profits—from $1.39 billion to $409 million—amid a wave of protests, vandalism, and boycotts tied to Musk’s cost-cutting work with the US government.
Technology stocks also rallied. Nvidia jumped 5.5%, while Apple and Meta rose 3% and 4.5%, respectively. The gains came despite hefty EU fines—€500 million for Apple and €200 million for Meta—for breaching digital competition laws.
Markets overseas shared in the optimism. In Europe, France’s CAC 40 rose 2.4%, Germany’s DAX climbed 2.6%, and the U.K.’s FTSE 100 added 1.4%. In Asia, Japan’s Nikkei 225 finished 1.9% higher, and the Hang Seng in Hong Kong jumped 2.4%, although China’s Shanghai Composite slipped 0.1%.
Energy prices ticked up, with US crude rising 55 cents to $64.22 a barrel. Despite the uptick, oil was still on track for its worst monthly performance since October 2023. Lower oil prices helped drive US gas prices down to $3.17 a gallon on average—14% lower than the same time last year. Brent crude rose 54 cents to $67.98.
In currency trading, the US dollar fell to 141.99 yen from 142.37 yen, while the euro rose slightly to $1.1392 from $1.1379.