US stocks gyrate wildly after Trump wavers on firing Fed's Powell

Trump reverses himself on firing Powell, saying he will wait until end of term in May 2026.
Bloomberg, New York Times confirm that Trump has been asking Republican politicians whether he should fire Powell.
US Dollar plunges on initial news before righting the ship.
S&P 500 sinks over 0.5% before recovering on Trump's reversal.

Clay Webster FXStreet

US President Donald Trump's intention to fire Federal Reserve (Fed) Chair Jerome Powell whipped the US stock market in both directions on Wednesday.

The S&P 500 got off to a good start, rising nearly 0.3% at the open. Then it dove more than 0.5% around 11:15 a.m. EST when Bloomberg confirmed earlier reporting from CBS that Trump had met on Tuesday night with Republican lawmakers, asking them whether he should fire Powell ahead of the central bank leader's term ending in May 2026.

Trump has been angry that Powell hasn't cut interest rates yet this year, as the Chair has said repeatedly that he would wait to see how the market responds to the administration's tariff policy. Additionally, sources say that Trump has been angling to use the Fed's $2.5 billion building renovation as a cause for firing Powell, pretending that Powell is somehow caught up in corruption.

Then the New York Times reported that Trump had drafted a letter to fire Chair Powell. This news sent the US Dollar plunging even more, and the Greenback sank by as much as 1.2%. However, Trump presumably saw what was happening and responded to reporters' questions around noon that he would wait for Powell's term to end.

This news helped US stocks to recover, and the S&P 500 is now down a more moderate 0.15% at the time of writing.

S&P 500 index chart for July 16, 2025 (1-minute candles)

Johnson & Johnson's (JNJ) earnings release in the premarket has been a point of positivity on an uncertain day. The purveyor of personal care products earned $2.77 in adjusted earnings per share (EPS) during the second quarter on revenue of $23.7 billion. These figures were $0.09 and $840 million above Wall Street consensus, and Johnson & Johnson raised its full-year outlook for both sales and EPS.

Meanwhile, Goldman Sachs (GS) stock sold off moderately despite offering an enormous Q2 beat to consensus. The major beat may have been already priced in due to the earnings releases of JPMorgan (JPM) and Citigroup (C) a day earlier.

Analysts raised their price targets on Nvidia (NVDA) and Palantir (PLTR), in both cases citing proximity to the artificial intelligence revolution. Needham raised its price target on NVDA from $160 to $200, and Mizuho hiked its target on PLTR from $116 to $135.

The Producer Price Index (PPI) for June printed unchanged on a monthly basis, providing a greater possibility that interest rate cuts will arrive sooner.

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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