The news:
US stock markets approached record highs as growing bets on Federal Reserve rate cuts drove the S&P 500 above its 19 February closing peak of 6,144.15, reaching 6,135.78. President Donald Trump intensified pressure on Fed Chair Jerome Powell, with The Wall Street Journal reporting he is considering naming Powell’s successor well before his term ends to undermine him.
The numbers: The Nasdaq Composite was trading 0.88% higher at 20,149.94 in the afternoon, reflecting investor optimism driven by tech sector gains and expectations for economic stimulus from Fed rate cuts.
Traders now price in a nearly 25% chance of a Fed rate cut in July, compared to 12.5% a week earlier, according to Reuters.
The context: The rally comes despite mixed economic data, including a downward revision in US first-quarter GDP to a 0.5% annualised contraction, reflecting a sharp downgrade to consumer spending, which rose just 0.5% rather than the 1.2% initially reported. Data also showed continuing jobless claims rose to their highest level since November 2021.
According to the WSJ, Trump is considering announcing Powell’s successor as early as September or October, a move analysts say could cast a shadow over the Fed’s authority and influence expectations for lower interest rates.
The reports drove the US dollar to its lowest level since early 2022 and contributed to a more than 10% decline this year. Investors said the perceived erosion of Fed independence was weakening the dollar’s credibility and global appeal.
After the report, the White House in a statement told the Financial Times that “no Federal Reserve chairman decisions are imminent, although the President has the right to change his mind.”