NEW YORK: Wall Street stocks surged on Wednesday on revived hopes for progress in the US-China trade dispute and President Donald Trump’s assurances that he has “no intention of firing” Federal Reserve Chair Jerome Powell, soothing fears that the central bank could lose its autonomy.
All three major US stock indexes rallied sharply and gained additional muscle after Treasury Secretary Scott Bessent said high tariffs between the US and China were unsustainable and Trump signaled he was open to de-escalating trade tensions between the world’s two largest economies.
“The market is trying to grapple with how real the potential for a near-term trade de-escalation is,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
Late Tuesday Trump dialed back his attacks on the Fed, which included threats that he would fire Powell, who is widely viewed as a stabilizing force in the market, which has been rattled by Trump’s chaotic trade policy.
“Fed independence is one of the unspoken bastions of the developed market system,” Mayfield added. “So to threaten that obviously had put pressure on bonds and the dollar and kind of accelerated that rotation out of American assets.”
First-quarter earnings season has hit full stride, with 110 of the companies in the S&P 500 having reported. Of those, 75% have beaten Wall Street estimates, according to LSEG.
Analysts now see aggregate S&P 500 earnings growth of 8.4% for the Jan to March period, up from an even 8.0% as of April 1, per LSEG.
Tesla shares jumped 8.2% after Chief Executive Officer Elon Musk said he would significantly scale back his work with the Trump Administration to devote more time to running his companies. Even so, the electric carmaker posted a 71% plunge in quarterly net profit.
Boeing reported a smaller-than-expected quarterly loss as the planemaker produced and delivered more aircraft. Its shares surged 6.3%.
General Dynamics posted a 27% increase in first-quarter profit on sustained defense demand, but the company’s business jet orders fell from the previous quarter. Its shares dropped 3.6%.
After the closing bell, traders will watch for results from IBM and Chipotle Mexican Grill, among others.
On the economic front, S&P Global’s advance “flash” April purchasing managers’ index showed business activity losing momentum and companies charging higher prices for goods and services amid mounting uncertainties.
“You’re going to be hard pressed to find an economist who thinks that this level of tariffs and trade protectionism is a good idea,” Mayfield said.
A Reuters/Ipsos poll showed just 37% of respondents approve Trump’s handling of the economy, souring significantly from 42% immediately following his inauguration, where he promised to “supercharge the economy.”
The Dow Jones Industrial Average rose 558.02 points, or 1.42%, to 39,745.00, the S&P 500 gained 111.74 points, or 2.11%, to 5,399.45 and the Nasdaq Composite gained 521.80 points, or 3.20%, to 16,822.22.
Among the 11 major sectors of the S&P 500, tech and consumer discretionary were the biggest percentage gainers, while consumer staples lagged.
Advancing issues outnumbered decliners by a 4.13-to-1 ratio on the NYSE. There were 37 new highs and 19 new lows on the NYSE.
On the Nasdaq, 3,396 stocks rose and 970 fell as advancing issues outnumbered decliners by a 3.5-to-1 ratio.
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