The Day Ahead: Markets Rally Today on Trump’s Softer Tone Toward Powell, China Tariffs

Market Overview

U.S. equity futures are sharply higher ahead of Wednesday’s open. S&P 500 futures are up 2.5%, Nasdaq 100 futures are gaining 2.7%, and Dow futures are rising 2.7%. This follows a strong Tuesday session where the S&P 500 closed up 2.51% to 5,288, the Dow rose 2.66% to 39,187, and the Nasdaq climbed 2.71% to 16,300.

The main theme driving markets this week is a sharp rebound in risk appetite, triggered by President Trump’s walk-back on firing Fed Chair Jerome Powell and softening tariff language toward China.

Key Economic Releases

Wednesday features several market-sensitive U.S. data points:

• Flash Manufacturing PMI (13:45 GMT) – Forecast: 49.0, Prior: 50.2
  • Flash Services PMI (13:45 GMT) – Forecast: 52.8, Prior: 54.4
  • New Home Sales (14:00 GMT) – Forecast: 684K, Prior: 676K
  • Crude Oil Inventories (14:30 GMT) – Forecast: 1.6M, Prior: 0.5M
  • Beige Book (18:00 GMT)

The Flash PMIs and Beige Book will be closely watched for signs of economic momentum. A manufacturing dip below 50 could increase pressure on the Fed to ease policy later this year.

Notable Earnings

In tech, Tesla (TSLA) shares jumped 5% pre-market despite a 71% drop in net income and a miss on all major metrics. Investors are responding to Elon Musk’s pledge to refocus on core EV operations and confirmed 2025 timelines for new product rollouts.

Wednesday sees a packed earnings slate, with key pre-market reports from Boeing (BA) expected to post a -$1.24 EPS loss and General Dynamics (GD) forecasted at $3.50 EPS. Also on watch: AT&T (T) at $0.53 EPS, Amphenol (APH) at $0.52, and Chipotle Mexican Grill (CMG) after the bell, with consensus at $0.28 per share. Analysts remain bullish on CMG despite weaker traffic tied to Q1 weather.

Post-close standouts include Lam Research (LRCX), Texas Instruments (TXN) at $1.07 EPS, IBM at $1.42 EPS, and ServiceNow (NOW) at $3.83 EPS. Homebuilders like M/I Homes (MHO) at $4.16 EPS and Lennox (LII) at $3.27 EPS are also worth monitoring for macro signals.

Central Bank Activity

Multiple Fed officials speak Wednesday:
• Goolsbee (13:00 GMT)
• Waller (13:35 GMT)
• Hammack (22:30 GMT)

Markets are reacting favorably to Trump’s softened stance on Powell. Sentiment improved significantly after President Trump said he had “no intention” of firing Chair Powell and reiterated a desire for rate cuts. Markets viewed this as a sign of reduced political risk to Fed independence.

The Beige Book (18:00 GMT) will be key for assessing regional economic trends and inflation pressures.

Outlook

Earnings and Fed commentary remain the key market drivers this week. Trump’s policy tone shift on Powell and China has temporarily eased investor concerns, helping fuel a relief rally.

Eyes now turn to PMI data, Fed speak, and the Beige Book for confirmation that growth and inflation trends still support soft-landing expectations.

Traders will also monitor Tesla’s execution, CMG’s outlook, and results from chipmakers and industrials for broader sentiment signals.

More Information in our Economic Calendar.