Trump Said No Intention to Fire Powell; De-escalation with China Spurs Frenzied Stock Buying, Gold Tumbles

President Donald Trump on Tuesday dialed back his threats to fire Federal Reserve Chair Jerome Powell and signaled potential de-escalation with China, easing investor concerns and sparking a rally in U.S. markets.

"I have no intention of firing him," Trump told reporters in the Oval Office after market close. "I'd like to see him be a bit more active on his ideas to lower interest rates," he added.

The shift in tone from President Trump triggered an immediate response on Wall Street, with Nasdaq 100 futures jumping nearly 2% in pre-market trading on Wednesday. Gold futures, which earlier touched a record high of $3,500 per ounce, retreated to $3,325 amid a risk-on sentiment.

Markets had been rattled during the Easter holiday weekend, as Trump repeatedly criticized Powell for not cutting interest rates more aggressively. His earlier comments, including calling Powell "a major loser" and stating his termination "cannot come fast enough," had raised concerns about the Fed's independence and contributed to a broad selloff across U.S. assets.

Despite stepping back from the firing threat, Trump's critique of the Fed's rate policy remains firm. "We think that it's a perfect time to lower the rate, and we'd like to see our chairman be early or on time, as opposed to late," he said.

Adding to the market optimism, Trump also hinted at progress on U.S.-China trade relations. He suggested that a deal with China could result in "substantially" lower tariffs on Chinese goods, though he added it "won't be zero." The comment was welcomed by investors looking for signs of easing tensions between the world's two largest economies.

Separately, U.S. Treasury Secretary Scott Bessent reinforced the prospect of de-escalation in trade tensions, describing the current state of U.S.-China relations as a "two-way embargo" that neither side sees as sustainable. In a closed-door presentation to investors at a JP Morgan conference, Bessent said negotiations have not yet begun but expressed optimism that progress would come in the "very near future," bringing "a sigh of relief" for markets.

Bessent emphasized that the Trump administration's goal is not to decouple from China but to encourage a "big, beautiful rebalancing" — with China shifting towards consumption and the U.S. towards more manufacturing. However, he acknowledged uncertainty over Beijing's willingness to adopt that path.

Meanwhile, Tesla CEO Elon Musk also weighed in during the company's earnings call, saying he would continue to advocate for lower tariffs. "I believe lower tariffs are generally a good idea for prosperity, but this decision is fundamentally up to the president of the United States," Musk said.