Stocks stage relief rally Wednesday as Trump backs off firing Powell, China tariffs
Stocks closed sharply higher Wednesday as trade war turbulence and the White House's attacks on the Federal Reserve chair eased.
The blue-chip Dow Jones Industrial Average tacked on 419.59 points or 1.1% to close at 39,606.57, while the broad S&P 500 Index jumped 1.7%, adding 88.06 points to 5,375.82. The Nasdaq Composite, made up of many tech companies, gained 2.5% or 407.63 points, closing at 16,708.05. All three indexes closed off intraday highs.
Gold slid 3.4% to close near $3,304 an ounce, backing off recent records. The precious metal stands to benefit from a weakening U.S. dollar, and is up more than 27% so far this year amid tariff squabbles. The 10-year U.S. Treasury note ticked down 2 basis points to 4.39%.
Federal Reserve leadership
After a week of harsh criticisms of the central bank chief, President Donald Trump said Tuesday that he has “no intention” of firing Federal Reserve Chairman Jerome Powell. On Monday, Trump called Powell a “major loser” and demanded that the central bank lower interest rates.
Powell's term as Fed chair ends in May 2026.
In other economic news, sales of newly constructed homes surged in March, the government said Wednesday. Sales were up more than 7% compared to February, beating analyst expectations. Lower mortgage rates during the month and concerns about escalating costs probably helped.
A Federal Reserve report released in the afternoon noted "uncertainty around international trade policy was pervasive" across all regions of the country. Despite that, the "Beige Book" found the economy was still expanding.
Trade War
Stocks were also supported by hopes the trade war will ease. Treasury Secretary Scott Bessent reportedly told a group of investors Tuesday Trump's trade war with China was unsustainable. According to media reports, Bessent also said that a deal between the two nations was possible and he expected “there will be a de-escalation” in the “very near future.”
On Wednesday morning, the Wall Street Journal reported that the White House is mulling slashing tariffs on China.
Tesla shares rebound despite profits plunge
Tesla reported disappointing first-quarter results and backed away from its full-year sales growth outlook. It admitted tariffs might affect its future profitability and announced CEO Elon Musk would spend more time at the company and less time on the Department of Government Efficiency, starting in May. Shares closed nearly 6% higher Wednesday.
The carmaker on Tuesday reported first quarter revenue of $19.34 billion, below the $21.43 billion Wall Street was forecasting and the $21.3 billion reported a year ago. Adjusted earnings per share of $0.27 missed the $0.44 forecast, and adjusted profits in the quarter were 40% lower than the year-ago quarter.
Tesla's net income for the quarter plunged 71% following a dip in vehicle deliveries, with the EV maker contending with increasing competition from foreign brands, shifting trade policies and a growing backlash to the brand in the wake of Musk teaming up with the Trump administration.
Corporate news
Intel stock closed nearly 6% higher on Wednesday after media reports late Tuesday said the chipmaker plans to cut 20% of its workforce. The company is set to report earnings after the bell on Thursday.
Boeing shares gained 6% after the company announced a narrower quarterly loss and higher revenue than analysts had expected.
AT&T stock was higher after the telecommunications company reported new customers had increased its first-quarter profit and revenue, and said it still expected to repurchase shares.
Companies scheduled to report earnings after the closing bell Wednesday include IBM, ServiceNow, Texas Instruments, and Chipotle Mexican Grill.
Contributing: Bailey Schulz