United States equities closed higher on Wednesday (Thursday AEST), recovering from early declines sparked by reports that President Donald Trump was preparing to fire Federal Reserve Chairman Jerome Powell.
The Dow Jones Industrial Average gained 231.5 points, or 0.5%, to finish at 44,254.8. The S&P 500 rose 19.9 points, or 0.3%, to 6,263.7, while the Nasdaq Composite climbed 52.7 points, or 0.3%, to 20,730.5, notching its ninth record close of the year.
Markets tumbled earlier in the session after a senior White House official told Republican lawmakers that Trump was “likely” to remove Powell soon.
The New York Times also reported that the president had drafted a termination letter and had shown it to lawmakers in a private meeting.
However, Trump later dismissed the speculation, saying it was “highly unlikely” he would fire Powell in the near term.
The back-and-forth exacerbated market volatility, with traders nervous over the implications for monetary policy independence. Trump has repeatedly criticised Powell in recent weeks, calling for drastic rate cuts.
On Tuesday, he said on Truth Social that the Federal Reserve should lower interest rates by 3 percentage points.
Fed Chair Powell has pushed back on political interference, noting that recent tariffs introduced by the Trump administration have materially impacted inflation projections and policy decisions.
“In effect, we went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs," Powell said earlier this month.
Economic data this week has further complicated the outlook. Consumer prices rose in June, reinforcing concerns about persistent inflation.
However, a separate report released Wednesday showed wholesale prices remained unchanged on a monthly basis, offering some relief.
Meanwhile, the second-quarter earnings season continues, with major U.S. banks in focus. Goldman Sachs reported better-than-expected results, sending its shares up by 0.9%.
Bank of America and Morgan Stanley also beat estimates but closed slightly lower on the day.
On the bond markets, yields declined modestly. The yield on the 10-year Treasury note fell 0.7% to 4.459%, while the 2-year yield dropped 1.5% to 3.894%
