Donald Trump’s surprise pivot on both tariffs and Federal Reserve Chair Jerome Powell sent Wall Street into a full-blown rally this week, calming market fears and easing pressure on rattled CEOs.
After weeks of volatility fueled by escalating rhetoric around “Liberation Day” tariffs on China and open threats to remove Powell, Trump struck a notably more measured tone. On Tuesday, he told reporters, “I have no intention of firing him,” in reference to the Fed Chair, just days after calling him a “major loser” on social media and suggesting his “termination cannot come fast enough.”
The about-face immediately reassured traders and business leaders alike. On Wednesday, the Dow surged 420 points, the S&P 500 rose 1.7%, and the Nasdaq jumped 2.8%, following an earlier 1,200-point morning spike.
Part of the rally was fueled by Treasury Secretary Scott Bessent, who reassured reporters that Trump would “seek to de-escalate” the trade war with China. He later added that full trade rebalancing could take “2 to 3 years,” signaling a longer but steadier path forward. His comments helped frame Trump’s moves as strategic rather than chaotic.
Behind the scenes, sources confirmed that Trump’s sudden shift followed an Oval Office meeting with the CEOs of Walmart, Target, Home Depot, and Lowe’s. Executives warned that supply chains were on the brink and that shelves across the U.S. could soon be empty due to escalating tariffs. Walmart CEO Doug McMillon reportedly told Trump that the disruption was already hitting consumers, and would worsen without action.
The warnings appear to have landed. Though Trump maintains that “every country wants to make a deal” and that negotiations with China and the EU are “going very well,” officials inside the White House admitted that they were “relieved” by his decision to back off Powell.
Powell, meanwhile, has held firm. He reiterated this week that the Federal Reserve would not issue emergency rate cuts, emphasizing that decisions would be made only after “careful consideration” by the Fed’s policy-setting committee, scheduled to meet in May.
Trump’s campaign team has not confirmed whether any legal review is ongoing regarding his authority to fire Powell. However, his Oval Office remarks suggest the issue may now be off the table.
Still, the episode exposed ongoing tension between the White House and the Fed, with Press Secretary Karoline Leavitt defending Trump’s criticism, claiming that the Fed’s past rate decisions “could be political.” No evidence supports that claim, and Powell has consistently rejected accusations of political bias.
While investors remain cautious, the week’s developments have offered short-term relief. Whether the calm holds depends largely on whether Trump sticks to his new tone, or reverts to more combative tactics as the 2025 campaign heats up.
For now, Wall Street is breathing a little easier.
