Wall Street is rattled as Trump says he discussed firing Powell but is
'unlikely' to do it
[July 17, 2025] By
STAN CHOE
NEW YORK (AP) — President Donald Trump sent the U.S. stock market on a
jagged round trip Wednesday after saying he had “talked about the
concept of firing” the head of the Federal Reserve. Such a move could
help Wall Street get the lower interest rates it loves but would also
risk a weakened Fed unable to make the unpopular moves needed to keep
inflation under control.
The S&P 500 rose 0.3% after whipping through an earlier drop and
subsequent recovery.
The Dow Jones Industrial Average gained 231 points, or 0.5%, and the
Nasdaq composite added 0.3% to its record set the day before.
Stocks had been rising modestly in the morning, before news reports
saying that Trump was likely to fire Fed Chair Jerome Powell quickly
sent the S&P 500 down by 0.7%.
When later asked directly if he was planning to fire Powell, Trump said,
“I don’t rule out anything, but I think it’s highly unlikely.” That
helped calm the market, and stocks erased their losses, though Trump
added that he could still fire Powell if “he has to leave for fraud.”
Trump has been criticizing a $2.5 billion renovation project underway of
the Fed’s headquarters.
Trump’s main problem with Powell has been how the Fed has not cut
interest rates this year, a move that would have made it easier for U.S.
households and businesses to get loans to buy houses, build factories
and otherwise boost the economy. Lower interest rates could also help
the U.S. government, which is set to borrow and add a lot more to its
debt after approving a wide range of tax cuts.
Powell, meanwhile, has been insisting that he wants to wait for more
data about how Trump’s stiff proposed tariffs will affect the economy
and inflation before the Fed makes its next move.
The Fed has two main jobs: keeping the job market strong while keeping
inflation under control. Lowering interest rates would help boost the
economy but would also give inflation more fuel when tariffs may be set
to push prices for U.S. households higher.
A report on Wednesday said inflation at the wholesale level slowed to
2.3% last month, which was better than economists expected. It’s an
encouraging signal, but it came a day after another report suggested
that Trump’s tariffs are pushing up the prices U.S. shoppers are paying
for toys, apparel and other imported products.
Trump’s tariffs are making their weight felt across financial markets.
ASML, the world’s leading supplier of chipmaking gear, warned that it
can’t guarantee growth next year, after delivering an expected 15%
growth in sales for 2025.
Conditions still look strong for ASML’s customers in the
artificial-intelligence business, but CEO Christophe Fouquet said in a
video that “the level of uncertainty is increasing, mostly due to
macroeconomic and geopolitical consideration. And that includes, of
course, tariffs.”
Shares that trade in the United States of ASML, which is based in the
Netherlands, fell 8.3%.
Stocks of several U.S. companies reporting stronger profits for the
latest quarter than analysts expected helped offset that.
[to top of second column] |
Federico DeMarco, left, and Ed Curran work on the floor at the New
York Stock Exchange in New York, Wednesday, July 16, 2025. (AP
Photo/Seth Wenig)
 Johnson & Johnson jumped 6.2% after
the drug and medical device giant beat analysts’ sales and profit
targets and raised its full-year forecasts for both. CEO Joaquin
Duato said it expects “game-changing approvals and submissions” in
the second half of 2025 on an array of products, including for lung
and bladder cancer.
PNC Financial Services Group added 0.9% following
its better-than-expected quarterly report, thanks in part to loan
growth despite what CEO Bill Demchak called “an uncertain macro
environment.”
GrabAGun, an online retailer of firearms and ammunition, swung
sharply after combining with Colombier Acquisition Corp. II and
taking its spot on the stock market under the ticker symbol “PEW.”
Donald Trump Jr., the son of President Trump, is joining the
company’s board.
The stock quickly went from an early gain of 19% to a drop of 31%
before finishing with a loss of 23.9%, with several halts in trading
along the way.
All told, the S&P 500 rose 19.94 points to 6,263.70. The Dow Jones
Industrial Average added 231.49 to 44,254.78, and the Nasdaq
composite gained 52.69 to 20,730.49.
In the bond market, the yield on the 10-year U.S. Treasury fell to
4.45% from 4.50% late Tuesday. It had been as low as 4.44% earlier
in the day, but it climbed following the reports that Trump was
likely to fire Powell.
A new Fed chair friendlier to Trump could mean lower short-term
interest rates but also the opposite effect on longer-term yields.
That’s because a less independent Fed would raise worries that it
may also let inflation run higher in the future by being slow to
raise interest rates.
In stock markets abroad, indexes mostly fell amid relatively modest
movements.
Stocks rose 0.7% in Jakarta after Trump said Tuesday that he plans
to charge imports from Indonesia a tariff of 19%, instead of the 32%
that he had threatened earlier, after reaching a trade deal.
Indonesia’s central bank also cut its key interest rate by 0.25
percentage points on Wednesday, to 5.25%.
“We have calculated everything and discussed everything. The most
important thing for me is my people, as I must protect the interests
of our workers,” Indonesian President Prabowo Subianto told
reporters, adding that “this is our offer, and we are not able to
give more (to the United States).”
___
AP Business Writers Matt Ott, Kelvin Chan and Elaine Kurtenbach
contributed.
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