US stocks staged a comeback overnight after early losses sparked by reports that President Donald Trump was preparing to fire Federal Reserve chairman Jerome Powell. The S&P 500 initially dipped on the news but recovered after Trump denied the claims, ultimately ending 0.32% higher at 6,263.70. The Nasdaq Composite gained 0.26% to close at 20,730.49, its ninth record finish this year, while the Dow Jones Industrial Average rose 231 points, or 0.53%, to end at 44,254.78, despite having fallen as much as 264 points earlier in the session.
Powell’s position and inflation concerns dominate sentiment
The prospect of Powell’s dismissal has been a growing concern for markets. Trump has repeatedly criticised the Fed chair for not slashing interest rates, even calling for a dramatic 3 percentage point cut on Tuesday. Powell, however, has defended the Fed’s stance, pointing out that Trump’s own tariffs have driven inflation higher, forcing the central bank to pause rate cuts.
Economic data this week added to inflationary worries. Tuesday’s consumer price index rose from May levels, while Wednesday’s flat wholesale inflation print masked underlying pressures. “The PPI does not include direct tariff effects,” said Marc Balcer of Girard, noting that the US$27bn in June tariff revenue must be absorbed somewhere, likely by consumers.
Bank earnings mixed
Bank earnings continued with a mixed market reaction. Goldman Sachs rose nearly 1% after beating expectations, while Bank of America and Morgan Stanley also posted strong results but saw their shares close slightly lower.
Commodities climb
Gold rose 0.67% to US$3359.10 an ounce, iron ore gained 1% to US$99.90 a tonne, and bitcoin jumped 2.3% to US$119,831. Brent crude was flat at US$68.69.
Australian outlook: jobs data in focus
Australian shares are expected to rebound, with SPI200 futures up 55 points to 8590. The local dollar edged up to US65.27¢. Attention now turns to the June labour force report, due at 11:30am AEST.
Quarterly updates are due from Santos, Yancoal Australia, Alcoa, Gold Road Resources and Genesis Minerals. In the US, retail sales and weekly jobless claims will be released tonight at 10:30pm AEST.
