After enduring a rough patch, the stock market is finally catching a break, fueled by President Trump’s unexpected pivot on tariffs and the Federal Reserve.

On Wednesday, U.S. stocks skyrocketed following Trump’s comments that calmed two of the biggest concerns: hefty tariffs imposed on China and worries over the future of Federal Reserve Chairman Jerome Powell. The markets responded favorably, leading to a significant rally.

Market Updates at 9:43 a.m. in New York:

- **S&P 500**: 5,437.31, up 2.83% - **Dow Jones Industrial Average**: 40,095.45, up 2.31% (+903 points) - **Nasdaq Composite**: 16,883.71, up 3.58%.

This midweek surge follows Tuesday’s nearly 1,000-point gain in the Dow, with both the S&P 500 and Nasdaq 100 climbing over 2%.

Other Financial Shifts:

- **10-Year Treasury**: down 10 basis points to 4.29% - **Dollar Index**: up 22 basis points to $99.14 - **Gold**: down 2.9% to $3,320 per ounce.

Trump's Assurance on Powell's Position

Following the market close on Tuesday, Trump assured he has "no intention" of firing Jerome Powell before his term concludes in May 2026. He expressed a desire for Powell to be more proactive in lowering interest rates, emphasizing that now is the perfect time for such a move.

Despite previously criticizing Powell as a "major loser" in his Truth Social posts, Trump tempered his stance, telling reporters, "The press runs away with things." This shift in tone came after remarks from White House economic advisor Kevin Hassett raised concerns about the legality of potentially firing Powell.

Trump Softens Stance on China Tariffs

In another notable shift, when questioned about the steep 145% tariff rate on Chinese imports, Trump remarked that it would be "substantially lower," asserting, "It won’t be anywhere near that high; it will come down significantly, but not to zero."

Treasury Secretary Scott Bessent echoed this sentiment at a JPMorgan investment summit, calling a trade war with China "unsustainable" and predicting a "de-escalation" soon.

Investor Reactions: Cheers and Optimism!

Investors welcomed Trump’s change of heart, with Fundstrat’s Tom Lee highlighting that the comments from Bessent signaled the U.S. is not looking to separate from China economically.

Economist David Rosenberg noted Trump’s approach as a sign of concession, igniting a short-covering rally in the markets. He emphasized the impact of Trump's trade and Powell remarks on market dynamics.

Katie Stockton from Fairlead Strategies noted that the S&P 500 is set up for a more significant relief rally, eyeing a target of 5,672 on the 50-day moving average, indicating a potential upside of 7%!