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)

MINNEAPOLIS (AP) — Federal agents carrying out immigration arrests in Minnesota's Twin Cities region already shaken by the fatal shooting of a woman rammed the door of one home Sunday and pushed their way inside, part of what the Department of Homeland Security has called its largest enforcement operation ever.

In a dramatic scene similar to those playing out across Minneapolis, agents captured a man in the home just minutes after pepper spraying protesters outside who had confronted the heavily armed federal agents. Along the residential street, protesters honked car horns, banged on drums and blew whistles in attempts to disrupt the operation.

Video of the clash taken by The Associated Press showed some agents pushing back protesters while a distraught woman later emerged from the house with a document that federal agents presented to arrest the man. Signed by an immigration officer, the document — unlike a warrant signed by a judge — does not authorize forced entry into a private residence. A warrant signed by an immigration officer only authorizes arrest in a public area.

Immigrant advocacy groups have conducted extensive “know-your-rights” campaigns urging people not to open their doors unless agents have a court order signed by a judge.

But within minutes of ramming the door in a neighborhood filled with single-family homes, the handcuffed man was led away.

More than 2,000 immigration arrests have been made in Minnesota since the enforcement operation began at the beginning of December, said Homeland Security spokesperson Tricia McLaughlin.

Homeland Security Secretary Kristi Noem told Fox News on Sunday that the administration would send additional federal agents to Minnesota to protect immigration officers and continue enforcement.

The Twin Cities — the latest target in President Donald Trump’s immigration enforcement campaign — is bracing for what is next after 37-year-old Renee Good was shot and killed by an immigration officer on Wednesday.

“We’re seeing a lot of immigration enforcement across Minneapolis and across the state, federal agents just swarming around our neighborhoods,” said Jason Chavez, a Minneapolis city councilmember. “They’ve definitely been out here.”

Chavez, the son of Mexican immigrants who represents an area with a growing immigrant population, said he is closely monitoring information from chat groups about where residents are seeing agents operating.

People holding whistles positioned themselves in freezing temperatures on street corners Sunday in the neighborhood where Good was killed, watching for any signs of federal agents.

More than 20,000 people have taken part in a variety of trainings to become “observers” of enforcement activities in Minnesota since the 2024 election, said Luis Argueta, a spokesperson for Unidos MN, a local human rights organization .

“It’s a role that people choose to take on voluntarily, because they choose to look out for their neighbors,” Argueta said.

The protests have been largely peaceful, but residents remained anxious. On Monday, Minneapolis public schools will start offering remote learning for the next month in response to concerns that children might feel unsafe venturing out while tensions remain high.

Many schools closed last week after Good’s shooting and the upheaval that followed.

While the enforcement activity continues, two of the state’s leading Democrats said that the investigation into Good's shooting death should not be overseen solely by the federal government.

Minneapolis Mayor Jacob Frey and U.S. Sen. Tina Smith said in separate interviews Sunday that state authorities should be included in the investigation because the federal government has already made clear what it believes happened.

“How can we trust the federal government to do an objective, unbiased investigation, without prejudice, when at the beginning of that investigation they have already announced exactly what they saw — what they think happened," Smith said on ABC’s "This Week."

The Trump administration has defended the officer who shot Good in her car, saying he was protecting himself and fellow agents and that Good had “weaponized” her vehicle.

Todd Lyons, acting director of U.S. Immigration and Customs Enforcement, defended the officer on Fox News Channel’s “The Sunday Briefing.”

"That law enforcement officer had milliseconds, if not short time to make a decision to save his life and his other fellow agents,” he said.

Lyons also said the administration’s enforcement operations in Minnesota wouldn't be needed “if local jurisdictions worked with us to turn over these criminally illegal aliens once they are already considered a public safety threat by the locals.”

The killing of Good by an ICE officer and the shooting of two people by federal agents in Portland, Oregon, led to dozens of protests in cities across the country over the weekend, including New York, Los Angeles, Washington D.C. and Oakland, California.

Contributing were Associated Press journalists Giovanna Dell’Orto in Minneapolis; Thomas Strong in Washington; Bill Barrow in Atlanta; Christopher Weber in Los Angeles; and John Seewer in Toledo, Ohio.

A woman gets into an altercation with a federal immigration officer as officers make an arrest Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/John Locher)

A federal immigration officer deploys pepper spray as officers make an arrest Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/John Locher)

A family member, center, reacts after federal immigration officers make an arrest Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/John Locher)

Bystanders are treated after being pepper sprayed as federal immigration officers make an arrest Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/John Locher)

A family member reacts after federal immigration officers make an arrest Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/John Locher)

Federal agents look on after detaining a person during a patrol in Minneapolis, Minn., Sunday, Jan. 11, 2026. (Christopher Katsarov/The Canadian Press via AP)

Bystanders react after a man was detained by Immigration and Customs Enforcement (ICE) agents during a traffic stop, Sunday, Jan. 11, 2026, in Robbinsdale, Minn. (AP Photo/John Locher)

People stand near a memorial at the site where Renee Good was fatally shot by an ICE agent, Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/Jen Golbeck)

A man looks out of a car window after being detained by Immigration and Customs Enforcement (ICE) agents during a traffic stop, Sunday, Jan. 11, 2026, in Robbinsdale, Minn. (AP Photo/John Locher)

Border Patrol agents detain a man, Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/Adam Gray)

People shout toward Border Patrol agents making an arrest, Sunday, Jan. 11, 2026, in Minneapolis. (AP Photo/Adam Gray)

Demonstrators protest outside the White House in Washington, Saturday, Jan. 10, 2026, against the Immigration and Customs Enforcement agent who fatally shot Renee Good in Minneapolis. (AP Photo/Jose Luis Magana)

Minneapolis Mayor Jacob Frey holds a news conference on Saturday, Jan. 10, 2026, in Minneapolis. (AP Photo/Jen Golbeck)

Protesters react as they visit a makeshift memorial during a rally for Renee Good, who was fatally shot by an ICE officer earlier in the week, Saturday, Jan. 10, 2026, in Minneapolis. (AP Photo/John Locher)