Stock Market Reacts to Trump's Denial of Powell Firing Rumors

The U.S. stock market experienced a notable rebound on Wednesday, July 15, 2025, following President Donald Trump’s assurances that he was not planning to dismiss Jerome Powell, the Chairman of the Federal Reserve. This statement came amidst swirling rumors that Trump had contemplated ousting Powell, which initially caused a significant downturn in stock prices.

During Wednesday’s trading session, the Dow Jones Industrial Average rose by 231.49 points, or 0.53%, while the S&P 500 and Nasdaq Composite gained 0.32% and 0.26%, respectively. However, the rebound was preceded by a sharp decline after a White House official suggested that Trump was likely to soon fire Powell, leading to a drop of more than 260 points in the Dow at its session low. Reports from The New York Times indicated that Trump had drafted a letter requesting Powell’s resignation to share with House Republicans, which heightened concerns among investors about potential instability within the Federal Reserve.

After the president publicly downplayed these reports, stating he was “not planning on doing it” but did not “rule out anything,” the market reacted positively, indicating that investors might have already adjusted their expectations regarding Powell’s position.

Michael Green, Chief Strategist at Simplify Asset Management, asserted that the market’s recovery suggests that Powell’s potential ousting is not a significant concern for investors at this time. “The only real piece of information, I would argue, that you got today is that firing Powell is not that big of a deal,” Green remarked in an interview with CNBC, emphasizing that the market’s focus now shifts to upcoming earnings reports, which could serve as a critical catalyst for future trading.

Several major companies, including Taiwan Semiconductor Manufacturing, Travelers, GE Aerospace, U.S. Bancorp, and Citizens Financial Group, are scheduled to report their earnings on Thursday, further influencing market sentiment. Green expressed optimism regarding the tech sector, predicting that the reports from tech leaders would likely surpass expectations.

As traders anticipate the release of weekly jobless claims and important economic indicators such as June's retail sales data and last month’s import/export price indexes, the broader market remains focused on these forthcoming reports.

In a separate analysis, Wolfe Research highlighted potential negative implications for markets if Trump were to proceed with firing Powell, predicting that such a move could trigger an equity selloff and an upward spike in long-term yields. Analysts Tobin Marcus and Chutong Zhu noted in their Wednesday report that the market is already bracing for possible volatility amid these heightened uncertainties.

On Wednesday, eight out of eleven sectors in the S&P 500 closed higher, with healthcare leading the gains at 1.22%, while energy stocks fell by 0.84%. Despite the positive performance, eight sectors remain negative for the week, primarily driven by a decline in energy stocks, which are down 3.35%.

In summary, while the market exhibited resilience in the wake of political uncertainty regarding the Federal Reserve's leadership, investors remain vigilant, with their sights set on upcoming earnings reports and economic indicators in the days ahead. The overall sentiment suggests a cautious optimism as traders navigate the complex landscape of economic data and political developments.