Dow Jones Wavers as Trump’s Push to Oust Fed Chair Powell Sparks Market Jitters

The Dow Jones Industrial Average (DJIA) saw early gains on Wednesday, buoyed by softer-than-expected US Producer Price Index (PPI) data, which fueled optimism for a potential Federal Reserve rate cut. However, the rally fizzled as the index retreated to the 44,000 level, rattled by President Donald Trump’s provocative signals about terminating Federal Reserve Chairman Jerome Powell’s tenure prematurely. Despite a lack of legal authority to dismiss Fed officials, Trump’s bold display of a draft termination letter for Powell during a Congressional appearance sent shockwaves through markets, underscoring his administration’s pattern of challenging institutional norms.

The June core PPI data, which dropped to 2.6% year-over-year from 3.0%, below forecasts, initially lifted market sentiment by suggesting muted inflationary pressures and reinforcing hopes for monetary easing. Yet, Trump’s comments about Powell, despite a later vague assurance that he was “not planning on doing anything” immediately, kept investors on edge. His actions appear aimed at rallying Congressional Republicans to explore avenues for removing Powell before his term ends in May 2026, raising concerns about the Federal Reserve’s independence and injecting uncertainty into financial markets.

Despite the PPI-driven optimism, rate cut expectations remain tempered. Market tools indicate a roughly 40% probability that the Federal Reserve will hold rates steady in September, with uncertainty lingering about additional cuts before year-end. The mixed signals from cooling producer inflation and persistent consumer price pressures have kept traders cautious, as lower business inflation has not yet translated into significant consumer savings.

From a technical perspective, the Dow Jones is struggling to maintain momentum after hitting resistance just shy of 45,000 earlier this month. The index is now testing the critical 44,000 level, with bearish momentum gaining traction as technical indicators retreat from overbought territory. If 44,000 fails to hold, the 50-day Exponential Moving Average near 43,095 could serve as the next significant support. As Trump’s political maneuvers and economic data continue to drive volatility, the Dow Jones remains poised for potential further declines.