The U.S.’s major stock index closed within a hair of its record high set in February, climbing on investors’ hopes that rate cuts and tariff relief are coming sooner than expected.
But it was vibes more than data that drove the equity surge. The Wall Street Journal reported that President Donald Trump was looking to name a successor to Federal Reserve Chair Jerome Powell earlier than expected, creating the possibility of interest rate cuts happening earlier than expected. Trump has put pressure on Powell to cut rates, despite the Fed chair’s steady wait-and-see approach.
Two members of the Federal Reserve’s rate-setting committee recently split with Powell and spoke out in favor of rate cuts.
“It’s been an absence of bad news,” Nelson Yu, head of equities at AllianceBernstein, told Fortune. “You’ve got the Middle East conflict starting to settle down, it seems like it’s going in the right direction, and conventional wisdom has it that Trump’s not going to do anything to disrupt tariff policy come July 9.”
Treasury yields fell on the news. The yield on the 10-year Treasury dropped to 4.24% from 4.29% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for the Fed’s rate actions, fell to 3.71%.
