S&P 500 futures rise 2% as Trump backs off Powell, tariffs
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Equity markets staged a sharp rebound on Wednesday, with S&P 500 futures jumping 2.5% as risk sentiment roared back in response to a sudden cooling of rhetoric from President Trump. After days of aggressive posturing, including threats to fire Federal Reserve Chair Jerome Powell and impose steep 145% tariffs on Chinese imports, Trump dramatically dialed down the tension, saying the tariff hike “will come down substantially” and that he has “no intention” to remove Powell from his post.
This shift in tone has been interpreted by markets as a meaningful de-escalation of political risk—at least for now. Trump’s apparent reversal comes after a turbulent stretch that saw equity indices plunge, the dollar slide, and gold hit all-time highs. Now, with the president blaming the media for mischaracterizing his remarks and reaffirming that Powell will remain in place, traders are embracing a risk-on stance and re-entering equity markets in force.
The rally began building in the overnight session, with futures on the S&P 500 and Nasdaq Composite climbing over 2%, while Dow Jones contracts advanced more modestly, up 1.2% ahead of the opening bell. The bounce reflects a collective market bet that Trump’s latest pivot signals at least a temporary pause in the chaos that had been roiling financial markets. Tech stocks, which bore the brunt of recent losses, were among the biggest beneficiaries in Tuesday’s recovery and appear set to extend gains.
Despite skepticism over the longevity of Trump’s moderation—given his track record of abrupt policy reversals—markets are opting to price in relief rather than brace for renewed volatility. The implication is that Powell’s tenure looks secure for now, and that the immediate threat of an aggressive tariff spike is off the table, lowering the probability of near-term macroeconomic disruption.
With a relatively quiet economic calendar ahead, focus remains squarely on political developments and earnings reports. The broader question for investors is whether this is a short-term bounce fueled by headline relief or the beginning of a more sustained recovery. Either way, markets have quickly pivoted back into dip-buying mode, with risk appetite snapping back in anticipation of policy stability—or at least, the appearance of it.
This shift in tone has been interpreted by markets as a meaningful de-escalation of political risk—at least for now. Trump’s apparent reversal comes after a turbulent stretch that saw equity indices plunge, the dollar slide, and gold hit all-time highs. Now, with the president blaming the media for mischaracterizing his remarks and reaffirming that Powell will remain in place, traders are embracing a risk-on stance and re-entering equity markets in force.
The rally began building in the overnight session, with futures on the S&P 500 and Nasdaq Composite climbing over 2%, while Dow Jones contracts advanced more modestly, up 1.2% ahead of the opening bell. The bounce reflects a collective market bet that Trump’s latest pivot signals at least a temporary pause in the chaos that had been roiling financial markets. Tech stocks, which bore the brunt of recent losses, were among the biggest beneficiaries in Tuesday’s recovery and appear set to extend gains.
Despite skepticism over the longevity of Trump’s moderation—given his track record of abrupt policy reversals—markets are opting to price in relief rather than brace for renewed volatility. The implication is that Powell’s tenure looks secure for now, and that the immediate threat of an aggressive tariff spike is off the table, lowering the probability of near-term macroeconomic disruption.
With a relatively quiet economic calendar ahead, focus remains squarely on political developments and earnings reports. The broader question for investors is whether this is a short-term bounce fueled by headline relief or the beginning of a more sustained recovery. Either way, markets have quickly pivoted back into dip-buying mode, with risk appetite snapping back in anticipation of policy stability—or at least, the appearance of it.