Trump Backs Off Threat to Fire Fed Chair Jerome Powell, Easing Wall Street Jitters

President Donald Trump has walked back his recent threats to fire Federal Reserve Chair Jerome Powell, a decision that brought a wave of relief to financial markets and the president’s own advisers.

Trump told reporters Tuesday, “I have no intention of firing him,” after days of escalating criticism directed at Powell, including a social media post that called the Fed chair a “major loser.” The announcement followed internal warnings from top aides who said any move against Powell could create chaos similar to the market instability triggered by Trump’s trade war with China.

Markets rallied in response. The Dow Jones Industrial Average climbed over 1,000 points, or 2.5%, by Wednesday morning. The S&P 500 rose 3%, and the Nasdaq jumped nearly 4%. Investors also returned to safer assets, sending yields on 10-year Treasury notes lower.

According to multiple sources familiar with the discussions, Trump’s advisers had cautioned him for months that removing Powell could lead to a legal battle and further economic fallout. While some officials doubted Trump would follow through, his recent rhetoric reignited concerns across the White House and Wall Street.

Trump has pressured the Fed to cut interest rates, claiming it would boost economic growth and soften the blow of his newly announced “Liberation Day” tariffs. Powell, however, has maintained the Fed will not act hastily and will base any policy decisions on economic data, not political pressure.

“The president has the right to express his displeasure,” White House Press Secretary Karoline Leavitt said at a briefing Tuesday. She doubled down on claims that recent Fed actions were politically motivated, an accusation Powell and Fed officials have consistently denied.

Kevin Hassett, Trump's top economic adviser, added to the tension by suggesting a new legal review was underway to assess whether the president could remove Powell. That marked a shift from his earlier defense of the Fed’s independence.

But ultimately, Trump’s own statement defused speculation.

“I never did,” he said when asked if he truly intended to remove Powell.

For now, that appears to have calmed market fears. But with continued uncertainty around trade policy and monetary strategy, analysts say Wall Street will stay cautious.