U.S. stocks ended higher on Wednesday, July 16, 2025, after a turbulent trading session sparked by reports that President Donald Trump was considering removing Federal Reserve Chairman Jerome Powell. The initial market sell-off was reversed after Trump denied the speculation, helping major indexes recover into positive territory.
The S&P 500 climbed 0.32% to close at 6,263.70. The Nasdaq Composite added 0.26% to end at a record 20,730.49—its ninth record close this year. The Dow Jones Industrial Average rose 231.49 points, or 0.53%, to 44,254.78 after falling as much as 264 points earlier in the day.
Markets were rattled earlier in the session when a senior White House official reportedly told Republican lawmakers that Trump was "likely to soon" fire Powell. The New York Times went further, reporting that the President had already drafted a dismissal letter and presented it during a closed-door meeting.
However, Trump later walked back the rumors, telling reporters that it was "very unlikely" he would take such action. “No, we have no plans to do that,” Trump said, though he added, “I never rule anything out.”
This isn’t the first time Trump has pressured the Federal Reserve. For weeks, he has criticized Powell for maintaining tight monetary policy and called for aggressive rate cuts—most recently demanding a 3% reduction in interest rates.
Powell, however, has pushed back diplomatically. Earlier this month, he stated that the Fed would have eased policy were it not for the inflationary impact of Trump’s tariffs. “We paused because tariff levels surged and nearly all inflation projections jumped significantly,” Powell said during recent congressional testimony.
Fresh data this week added to concerns about persistent inflation and the ongoing impact of tariffs on the U.S. economy. The Consumer Price Index (CPI) for June, released on July 15, showed a month-over-month increase. Meanwhile, producer prices were flat in June compared to May, but deeper analysis revealed limited optimism for inflation relief.
These figures have raised questions about whether the Fed can maintain its current stance without adjusting rates soon.
Meanwhile, the second week of the Q2 earnings season saw key financial institutions report mixed market reactions despite solid earnings. Goldman Sachs beat expectations, lifting its stock nearly 1%. However, shares of Bank of America and Morgan Stanley fell slightly, reflecting market anxiety about slowing credit growth if the economy continues to weaken.
Despite the recent volatility, analysts see the market’s pullback as part of a necessary correction. Trump's reassurance about Powell helped restore confidence, but investors remain cautious amid unresolved trade issues, uncertain inflation trends, and future rate policy.
As earnings season accelerates and the Fed prepares for its next policy meeting, global investors will be closely monitoring every signal from Washington and the Fed for signs of market direction in the coming weeks.
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