By John Meyer, consultant in financial affairs – Eurasia Business News, July 17, 2025. Article no. 1632

U.S. stocks ended higher on Wednesday after President Donald Trump downplayed reports suggesting he intended to fire Federal Reserve Chair Jerome Powell. The trading day was marked by dramatic swings: major indexes such as the S&P 500 and Dow Jones initially fell sharply—by as much as 0.8%—following reports that Trump told Republican lawmakers he might seek Powell’s removal.

However, markets rebounded after Trump stated it was “highly unlikely” he would fire Powell, helping restore investor confidence and sending all major U.S. equity indices into positive territory by the close. The S&P 500 finished up 0.3%, the Dow Jones rose 0.5% (about 231 points), and the Nasdaq Composite gained 0.3%, notching its ninth record close this year.

Bank stocks remained a weak point, with Morgan Stanley dropping 1.2% and several other largest U.S. lenders in the red on the day. Wall Street fears that Powell’s replacement could set off an unruly period in markets and increase the risk of inflation rebounding.

Goldman Sachs Chief Executive David Solomon said Wednesday that U.S. Federal Reserve independence is important and something that should be fought for, weighing in as noise increases that President Trump has considered removing Chair Jerome Powell.

 Solomon stated:

“I think central bank independence, not just here in the United States but around the world, has served us incredibly well. I think central bank independence, Fed independence, is very important and it’s something we should fight to preserve.” 

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Trump’s remarks calmed market fears of political interference with monetary policy, which had earlier unnerved investors and contributed to a spike in longer-term Treasury yields. Earlier suggestions that Powell could be dismissed, including reports of a draft termination letter shown to House Republicans, had initially triggered broad selling. But Trump’s pivot and denial of immediate plans led stocks to recover their losses.

The episode highlights ongoing market sensitivity to perceived threats to the independence of the Federal Reserve and the critical role such headlines play in daily price action.

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© Copyright 2025 – Eurasia Business News. Article no. 1632.