US President Donald Trump made headlines on Tuesday night when he stated that he has “no intention” of dismissing Federal Reserve Chair Jerome Powell. This remark prompted an immediate response from the markets.
Following this comment, stocks and cryptocurrencies experienced a significant after-hours rally, effectively reversing the tension that had built up after Trump spent the previous week criticizing Powell and suggesting his ouster.
This reversal came just hours after Trump expressed a desire for interest rate cuts and characterized Powell as a “major loser,” insisting that his “termination cannot come fast enough.”
Futures for the Dow Jones Industrial Average soared by 444 points, marking a 1.1% increase. The S&P 500 futures rose by 1.4%, while Nasdaq 100 futures climbed by 1.6%. Notably, this occurred mere hours after the Dow had wrapped up the trading day with an impressive gain of over 1,000 points, effectively ending a four-day losing streak.
Both the S&P 500 and Nasdaq Composite indices closed with gains exceeding 2% on Tuesday, clearly indicating that investors were responding to Trump’s comments about Powell.
Crypto and Dollar Rise Following Trump’s Remarks on Powell
Bitcoin surged approximately 3% overnight, reaching $92,727 on Wednesday following Trump’s comments. Other smaller cryptocurrencies, including Ether, XRP, and Solana, also experienced upward movement soon after Trump opted to keep Powell in position.
The US dollar saw a rebound of around 0.9% against the Japanese yen following a phase of considerable weakness. Earlier, the greenback had fallen to a three-year low against a range of major currencies on April 21, as indicated by the ICE Dollar Index dipping to 97.92.
Trump’s decision to retain Powell coincided with US Treasury Secretary Scott Bessent informing investors during a private meeting that the trade tensions with China could not be sustained by either side. He emphasized the necessity for both governments to de-escalate to prevent lasting economic harm.
Further boosting market sentiment, a late-night report suggested that Cantor Fitzgerald LP, Tether Holdings Ltd., and SoftBank Group were in discussions to establish a $3 billion special purpose acquisition company aimed at assimilating substantial crypto holdings.
Short-Term Pullback Anticipated Amid Gold’s Continued Ascent
Despite the positive momentum, some traders cautioned that this rally might be short-lived. Stefan von Haenisch, who oversees over-the-counter trading in the Asia-Pacific region for Bitgo, remarked that the crypto market may have surged too quickly. “The market has rallied nonstop and feels a bit overextended here,” he observed, adding that a dip to $88,000 for Bitcoin could be “not unexpected” before the end of the week.
Although Bitcoin and stock markets were on the rise, some investors seemed skeptical. They have increasingly turned to gold, and this trend shows no signs of abating. Gold futures skyrocketed over 8% this month and reached an all-time high of $3,509.90 on Tuesday. Investors are channeling their cash into gold while keeping an eye on the ongoing political developments.
Jamie Cox, managing partner at Harris Financial Group, referred to this gold investment as a temporary phenomenon. “A significant amount of capital is currently parked in gold, leaving ample unproductive funds ready to re-enter the market soon,” Jamie noted. “The capital is there; it’s just hiding under the guise of gold for now.”
The overarching lesson from these developments is clear: a single statement from the President can significantly influence the global financial landscape. Stocks, Bitcoin, gold—everything appears responsive to Trump’s sentiments, particularly regarding the Federal Reserve. On Monday, he suggested he would fire Powell; by Tuesday, his stance shifted, leading to market valuations that increased by trillions by Wednesday morning.
