Stocks continue rally as China tariff cut considered

U.S. stocks continued to rally as the White House reportedly considers slashing tariffs on China and President Donald Trump said he doesn’t plan to fire Federal Reserve Chair Jerome Powell.

The S&P 500 Index rose 3.0% late Wednesday morning, while the Nasdaq 100 Index climbed 3.7%. Wall Street’s relief rally seems set to build on its biggest equity gains in about two weeks. The last time the S&P 500 notched three consecutive days with a move of 2% or more in either direction was in October 2022.

Optimism over easing trade tensions between the U.S. and China helped push the relief rally further. The Wall Street Journal reported that Trump’s tariffs on China were likely to come down between around 50% and 65%, citing one senior White House official.

Trump told reporters Tuesday that he planned to be “very nice” to China in any trade talks, and that tariffs would drop if the two nations were able to reach a deal—a sign that his tough stance on Beijing could be softening amid market volatility.

“It’s possible that he realizes he left himself no outs and seriously misplayed his hand,” Scotiabank economist Derek Holt wrote in a note published Wednesday morning. “He may be trying to de-escalate because China is digging in against tariffs, while the dysfunctional EU has predictably splintered in its response.”

Holt noted that it is also “entirely possible” Trump comes back at a later date and “slams China again.” For now, though, equities “trust Trump, but perhaps they never learn.”

“The issue is, there are still massive tariffs on Chinese and U.S. imports, and talks have not yet started,” said XTB’s Kathleen Brooks. “To avoid a dismal outlook for global growth, as the IMF laid out on Tuesday, an agreement needs to be made quickly.”

Trump also allayed fears around Powell’s position on Tuesday, saying that he had no intention of firing the Fed chair despite his frustration with the central bank not moving more quickly to cut interest rates.

“We have been seeing deep down days in stocks reversed the next day by big up days, leading to a sideways market,” said Gaurav Mallik, chief investment officer at Pallas Capital Advisors, who said equities are rangebound. “A sideways market is common at times in investing, and it can take a few months for corrections to end, and we still believe that this is a correction given the speed of the declines.”

Meanwhile. despite a series of misses across the board on its earnings report, Tesla Inc. jumped as Elon Musk pledged to dedicate “far more” of his time to the electric-vehicle maker starting next month, assuaging investor concerns about the company’s worst quarter in years.

Boeing Co. rose after the planemaker reported first-quarter results that exceeded consensus expectations. Intel Corp. gained after Bloomberg reported the chipmaker is planning to cut more than 20% of its staff.

In addition to the slew of earnings, data this morning also showed U.S business activity expanded at the slowest pace since 2023. The Fed will release its Beige Book this afternoon.