U.S. stock index futures surged sharply on Tuesday evening following President Trump’s moderation in his critical stance toward Federal Reserve Chair Jerome Powell and his hints at reducing China tariffs. The S&P 500, Nasdaq 100, and Dow Jones futures increased by 1.7% to 2.2%, suggesting strong momentum for an upcoming rally.

Reassurance on Fed Independence

• No Removal of Powell: Trump stated that he ‘does not intend to fire Jerome Powell’, significantly lessening concerns about central bank independence.

• Reduced Rate-Cut Pressure: The President’s toned-down rhetoric has lessened the risk premium linked to Fed policy uncertainty.

Potential Easing of China Tariffs

• Positive Comments on U.S.-China Relations: Trump claimed that trade relations with China are ‘doing fine’ and that existing 145% tariffs on China could undergo substantial reductions (but would not be eliminated entirely).

• Support from Treasury Secretary: Scott Bessent labeled the trade war as ‘unsustainable’, reaffirming the market’s hopes for a resolution.

Market Reaction in Futures & Indices

• S&P 500 Futures: Increased by 2.0% to 5,422.0

• Nasdaq 100 Futures: Rose by 2.2% to 18,795.0

• Dow Jones Futures: Up by 1.7% to 40,012.0

• Wall Street Close:

  • S&P 500: +2.5% to 5,287.75

  • Nasdaq Composite: +2.7% to 16,300.42

  • Dow Jones Industrial: +2.7% to 39,186.98

Tesla Sees After-Hours Gains

• TSLA +5.1%: Shares rose as Elon Musk committed to minimize distractions to return focus to Tesla’s core vehicle business.

• Q1 Performance: Despite lackluster revenue and profits, the stock rallied following Musk’s renewed commitment.

Key Events to Keep an Eye On

1. Economic Data Releases: Flash PMIs scheduled for Wednesday will provide insights into the trade-war impact on economic activity.

2. Fed Official Speeches: Any statements from Fed officials will test the stability of Tuesday’s rally.

3. Ongoing Trade Negotiations: Look for specific steps towards tariff reductions, which may contribute to further gains in risky assets.

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