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Markets saw volatile trading Wednesday afternoon after Trump denied talk that he’s ready to fire Fed Chair Powell.
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Stocks dropped after sources said the president “likely will soon” fire the Fed chief.
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But the losses were pared after Trump backed away from the reports he could oust Powell for cause.
Stocks pared losses after President Donald Trump backed away from reports that he’s getting ready to fire Federal Reserve Chairman Jerome Powell.
Major indexes dropped sharply after a White House official told Bloomberg that the president was likely to fire the Fed chief soon, and had discussed Powell’s termination in a meeting with Republican lawmakers on Tuesday.
Indexes dropped suddenly and bond yields ticked higher on the report. The Dow dropped as much as 260 points, and the S&P 500 lost 0.5%. Stocks pared losses and yields edged lower shortly after Trump’s comments on the matter, though.
Here’s where major indexes stood at 12:55 p.m. ET:
S&P 500: 6,249.36, up 0.09%
Dow Jones Industrial Average: 44,101.65, up 0.18% (+78.36 points)
Nasdaq Composite: 20,690.51, up 0.04%
A senior White House official confirmed to BI that Trump asked a group of lawmakers how they felt about him firing Powell on Tuesday, and that they expressed approval for firing him. Trump then indicated that he “likely will soon,” according to the official.
But when speaking in the Oval Office on Wednesday, Trump appeared to refute the reports, saying it was “highly unlikely” he would fire Powell.
“No, I’m not talking about that,” the president said. “Fortunately, we get to make a change in the next what, eight months or so, and we’ll pick somebody that’s good.”
It is unclear how soon Trump could move to fire Powell, or whether he will do so at all — the president is known to change his mind or reverse course, especially as markets balk at his proposals.
Trump said in April he had no intention of firing Powell, but markets have been rattled by the president’s numerous attempts to undermine Powell’s influence this year.
Earlier this week, analysts at Deutsche Bank said Trump removing Powell from his post was one of the most underappreciated risks in markets, with investors pricing in just a 20% chance of Powell’s removal this year. The event could also pose severe risks to the currency and bond market, the bank wrote.
Market pros generally agree that firing Powell could lead to a series of negative consequences for the economy and financial markets, mainly because it puts the Fed’s independence into question and shakes confidence that the central bank will be able to tame inflation by keeping interest rates elevated.
Read the original article on Business Insider
