Market Report for Wednesday, April 23, 2025
Stocks v-bounced on Tuesday, erasing Monday’s crash, as the Treasury secretary suggested a full trade shutdown with China might not be ideal, and the president said he won’t fire the Fed chair—just badger him for now.
Level Change 4/22/25 (%)
– – – – – – – – – – – – – – –
+2.7 Dow
+2.7 Nasdaq
+2.6 Nasdaq 100
+2.5 S&P 500
+2.6 S&P 400
+2.6 S&P 600
After three drops in four sessions, the S&P called time on the slide. The Nasdaq did one better, breaking a four-day losing streak.
Even American exceptionalism caught a breeze, with Treasuries drawing a few tepid buyers despite Washington’s fiscal freak show, and the greenback picking itself up from Monday’s three-year low. Uncle Sam may have wandered into traffic, but he’s still dodging the cars—and occasionally flipping one off.
A low bar for trade helped. When you’ve throttled commerce with the world’s largest trading economy, the only surprise left is sanity. Treasury Secretary Scott Bessent suggested just that, telling investors behind closed doors at a JPMorgan-hosted meeting in Washington that the tariff war with China was “unsustainable” and likely to “de-escalate,” Bloomberg reported. It’s a spectacle when one of the hands on the matchbox wonders aloud if maybe things got a little warm.
President Trump chimed in that he, too, thought a deal with China was possible, promising to be “very nice” in negotiations. “If we don’t make a deal, we’ll just set the number,” he told reporters, none of whom attempted to translate. He also mentioned something about a golden age, though he didn’t specify whether it was past, future, or entirely imaginary.
But his market-moving musing wasn’t about trade, it was about sparing Jerome Powell. After days of hinting he might fire the Fed chair, Trump clarified Tuesday he has “no intention of firing” him, though he wishes the “major loser” whose “termination cannot come fast enough” would be “a little more active” in cutting rates. Ideally to zero. Lower if he can swing it. Maybe straight through the floor.
Amid Trump’s trade war, it’s easy to see why. The damage is showing, and the sooner the Fed starts slapping on plaster, the better.
The latest tariff-trampled data came from the April Richmond Fed manufacturing index, which sank nine points this month to -13 after a ten-point drop in March. That’s the worst two-month drop-off since early 2022. It missed the forecast of -6, and anything below zero means contraction. The report added a southern drawl to the stagflation narrative, with manufacturers reporting rising prices received and expecting more of the same over the next 12 months.
This could not have sat well with Minneapolis Fed President Neel Kashkari. He told the US Chamber Global Summit that “near-term inflation expectations have increased quite a bit in response to the trade wars.” He was comforted, however, that long-run expectations haven’t yet. Somewhere beyond the visible horizon, maybe just past the unicorn pasture, things will look up. Meantime, he frets American appeal. Investors aren’t exactly fleeing, “but is it as true today that we are the destination of choice as we were a month ago?”
Fed Governor Adriana Kugler didn’t seem much happier in remarks at the University of Minnesota. Tariffs, she said, were much bigger than expected, and their effects—plus the uncertainty they’ve stirred up—are “likely to be larger than anticipated.” And in case anyone was buying the White House spin that this mess is the Fed’s fault, she made it clear: “The uncertainty is not coming from us.”
— Jason Kelly
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