Wall Street rises and markets rally worldwide as Trump softens his tough talk on tariffs and the Fed

NEW YORK (AP) — U.S. stocks rose Wednesday as a worldwide rally came back around to Wall Street after President Donald Trump appeared to back off his criticism of the Federal Reserve and his tough talk in his trade war.

The S&P 500 climbed 1.7% and added to its big gain from Tuesday that more than made up for a steep loss on Monday. The Dow Jones Industrial Average rose 419 points, or 1.1%, and the Nasdaq composite gained 2.5%.

Wall Street’s gains followed strong moves higher for stocks across much of Europe and Asia. They also continued a dizzying, up-and-down run for financial markets as investors struggle with how to react to so much uncertainty about what Trump will do with his economic policies.

The market’s latest move was up in part because Trump said late Tuesday that he has “no intention” to fire the head of the Federal Reserve. Trump had been angry with Jerome Powell, whom Trump had called “a major loser,” because of the Fed’s hesitance to cut interest rates.

Trump’s tough talk had frightened investors because the Fed is supposed to act independently, without pressure from politicians, so that it can make decisions that may be painful in the short term but are best for the long term.

While a cut to interest rates by the Fed could give the economy a boost, it could also put upward pressure on inflation. Economists say Trump’s tariffs are likely both to slow the economy and to raise inflation, at least briefly.

Trump may have recognized the market’s fear about a move against Powell. He may also be looking to keep someone around whom Trump could blame later if the economy does fall into a recession, according to Thierry Wizman, a strategist at Macquarie.

“Indeed, if the Fed cuts its policy interest rates aggressively, Trump would have little excuse for a recession apart from the pugnacity of his tariff policies,” Wizman said.

Markets also rose after Trump said late Tuesday that U.S. tariffs on imports coming from China could come down “substantially” from the current 145%. “It won’t be that high, not going to be that high,” Trump said.

The hope along Wall Street has been that Trump would lower his tariffs after negotiating trade deals with other countries, and Trump said Tuesday he would be “very nice” to the world’s second-largest economy and not play hardball with Chinese President Xi Jinping.

“There is an opportunity for a big deal here,” U.S. Treasury Secretary Scott Bessent said Wednesday.

If Trump brings his tariffs down enough, investors believe a recession could be averted.

U.S. businesses say they’re already feeling the effects of the trade war. A preliminary reading of U.S. business activity fell to a 16-month low, as the threat of tariffs helped push up prices charged for goods and services, according to S&P Global’s latest survey released Wednesday.

All the uncertainty means one of the few predictions many along Wall Street are willing to make is that sharp swings for financial markets will continue for a while. The market will “more likely than not continue to be dictated by Trump’s latest whims regarding tariffs and trade,” said Tim Waterer, chief market analyst at KCM Trade.

The S&P 500 remains 12.5% below its record set earlier this year after briefly dropping roughly 20% below the mark. Its swings have been coming not just day to day but also hour to hour as Trump and his administration’s officials continue to surprise markets. On Wednesday alone, the S&P 500 charged to a 3.4% gain in the morning, only to more than halve that rise as the day progressed.

Trump’s latest comments had a relaxing effect on the bond market, where Treasury yields eased. It’s a turnaround from earlier this month, when spiking Treasury yields raised fears that Trump’s actions were scaring investors away from the United States and weakening the U.S. bond market’s reputation as one of the safest places to keep cash.

The yield on the 10-year Treasury fell to 4.38% from 4.41% late Tuesday. It dropped as low as 4.26% earlier in the morning.

On Wall Street, Big Tech helped lead stock indexes higher.

Nvidia rose 3.9% to claw back more of the sharp losses it took last week, when it said U.S. restrictions on exports of its H20 chips to China could hurt its first-quarter results by $5.5 billion. The chip company’s stock was the strongest single force lifting the S&P 500.

Other stocks in the artificial-intelligence technology ecosystem also drove higher. Vertiv Holdings, which traces its roots to the industry’s first manufacturer of computer room air conditioning, jumped 8.5% after reporting stronger profit and revenue for the latest quarter than analysts expected. It said it’s continuing to see accelerated demand from AI data centers.

Super Micro Computer, a company that makes servers used in AI, rose 7.6%. Palantir Technologies, which offers an AI platform for customers, climbed 7.3%.

Tesla revved 5.4% higher after CEO Elon Musk said he’ll spend less time in Washington and more time running his electric vehicle company after Tesla on late Tuesday reported a big drop in profits. It’s been struggling because of backlash against Musk’s efforts to lead cost-cutting efforts by the U.S. government.

All told, the S&P 500 rose 88.10 points to 5,375.86. The Dow Jones Industrial Average added 419.59 to 39,606.57, and the Nasdaq composite gained 407.63 to 16,708.05.

In stock markets abroad, indexes jumped 2.1% in France, 2.4% in Hong Kong and 1.9% in Japan. Stocks in Shanghai were an exception, where they dipped 0.1%.

AP Business Writers Yuri Kageyama and Matt Ott contributed.

Trader Robert Oswald works on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Specialists Mark Fitzgerald, left, and John Parisi confer on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Trader Jonathan Mueller works on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Trader Sal Suarino works on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Specialist Anthony Matesic, left, and trader Michael Conlon work on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Specialist Michel Pistillo, left, works with traders James Matthews, center, and Ryan Falvey on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Trader Niall Pawa, left, and Specialist Meric Greenbaum work on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Specialist Glenn Carell, left, and trader Timothy Nick work on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Trader Michael Milano works on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Trader Fred Demarco works on the floor of the New York Stock Exchange, Wednesday, April 23, 2025. (AP Photo/Richard Drew)

Specialist James Denaro, right, and trader Dylan Halvorsan, center, work on the floor of the New York Stock Exchange, Tuesday, April 22, 2025. (AP Photo/Richard Drew)

Traders Drew Cohen, left and Michael Capolino work on the floor of the New York Stock Exchange, Tuesday, April 22, 2025. (AP Photo/Richard Drew)

A Donald Trump bobblehead sits on the counter as trader Jonathan Mueller works on the floor of the New York Stock Exchange, Tuesday, April 22, 2025. (AP Photo/Richard Drew)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, April 23, 2025. (AP Photo/Ahn Young-joon)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, April 23, 2025. (AP Photo/Ahn Young-joon)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, April 23, 2025. (AP Photo/Ahn Young-joon)

The rock band R.E.M. is putting out a special rerelease of its first single, “Radio Free Europe,” to benefit — wait for it — the actual Radio Free Europe.

Radio Free Europe/Radio Liberty is among the U.S. government-funded media services that deliver news in overseas markets. President Donald Trump's administration, claiming they are wasteful and promote a liberal point of view, is trying to choke off their funding.

A federal judge this week ordered the Republican administration to restore $12 million to Radio Free Europe/Radio Liberty that was appropriated by Congress. Lawyers for the service, which has been operating for 75 years, said it would be forced to shut down in June without the money.

In the first line of its song “Radio Free Europe,” R.E.M.'s Michael Stipe sings: "Decide for yourself if radio's going to stay.”

“Whether it's music or a free press — censorship anywhere is a threat to the truth everywhere,” Stipe said on Friday. “On World Press Freedom Day, I'm sending a shout-out to the brave journalists at Radio Free Europe.”

Stephen Capus, RFE/RL president, said R.E.M.'s music has always represented a celebration of freedom to him. He said inspiring and upholding freedom to audiences that might not always experience it is the goal of his organization's journalists.

Released on a tiny independent label, the “Radio Free Europe” single was the first the world had heard from the Athens, Georgia-based band, whose career eventually took it to the Rock and Roll Hall of Fame. The band called it quits in 2011.

The song was later inducted into the Library of Congress' National Recording Registry for setting the pattern for independent rock releases at the time.

The five-song EP will include the original recording of the song and a remix made this year by the band's collaborator Jacknife Lee. It will also contain three other songs made at the same time: the single's B-side, “Sitting Still”; the instrumental “Wh. Tornado”; and a previously unreleased “Radio Free Dub” remix.

The producer of the original recording session, Mitch Easter, is supervising this year's rerelease. It's available for streaming on Friday, and a special vinyl pressing can be bought at independent record stores and R.E.M.'s mail order store. Proceeds from all vinyl sales go to RFE/RL.

David Bauder writes about the intersection of media and entertainment for the AP. Follow him at http://x.com/dbauder and https://bsky.app/profile/dbauder.bsky.social.

FILE - Michael Stipe, of the band R.E.M., center, speaks as he accepts the Video Vanguard award during the 1995 MTV Video Music Awards at Radio City Music Hall in New York on Sept. 7, 1995. Standing by are fellow band members, from left, Mike Mills, Peter buck and Bill Berry. (AP Photo/Bebeto Matthews, File)