Wall Street rides roller-coaster after Trump walks back talk of firing Powell

Stock markets in North America, especially in the U.S., are riding a roller-coaster Wednesday as President Trump floats the idea of firing Federal Reserve Chair Jerome Powell.

U.S. stocks are shaky on Wednesday as President Donald Trump said he had “talked about the concept of firing” the head of the Federal Reserve. Such a move could help Wall Street get lower interest rates, which it loves, but could also mean a weakened Fed unable to make the unpopular moves needed to get inflation under control.

The S&P 500 was edging up by 0.1 per cent in midday trading after whipping through an earlier, jagged drop and subsequent recovery.

The Dow Jones Industrial Average was up 94 points, or 0.2 per cent, as of 1 p.m. Eastern time, and the Nasdaq composite was adding 0.1 per cent to its own record set the day before.

The Toronto Stock Exchange was up roughly 0.2 per cent just after 1pm Eastern time.

Stocks had been rising modestly in the morning following a better-than-expected update on inflation across the country. But midmorning news reports that Trump was likely to fire Fed Chair Jerome Powell quickly sent the the S&P 500 down by 0.7 per cent.

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, but Trump said 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.

But Powell has been insisting that he wants to wait for more data about how Trump’s tariffs will affect the economy and inflation before the Fed makes its next move. While lower interest rates can help boost prices for investments, they can also give inflation more fuel. And the economy only recently came out of the shock that sent inflation over nine per cent in the summer of 2022.