Global equities rallied on Wednesday as investor sentiment recovered, following President Trump’s denial of any intent to remove Federal Reserve Chair Jerome Powell. Earlier in the week, risk appetite had been dampened by growing concerns that the administration might interfere with another key independent institution. While the issue now appears temporarily settled, the fact that Trump’s reassurance came only in response to a journalist’s question has left some observers uneasy.
US stocks began to rebound late Tuesday, following comments from US Treasury Secretary Scott Bessent during a private event hosted by JPMorgan Chase. Bessent told investors that he anticipated a de-escalation in trade tensions with China. Adding to the optimism, Trump remarked that he would be “very nice” in upcoming negotiations with Beijing, hinting at the possibility of lowering tariffs — though not eliminating them entirely.
These developments have temporarily lifted investor confidence, providing a much-needed boost to market sentiment. Still, caution remains the prevailing tone. The continuous uncertainty — marked by political unpredictability and shifting rhetoric — continues to weigh on risk appetite. Each crisis averted offers short-term relief, but the underlying instability discourages sustained investment enthusiasm.
Global investors, once heavily overweight in US assets, have recently begun paring back their exposure. Should uncertainty persist, this reversal of “US exceptionalism” could continue, posing further downside risks for both US equities and the dollar.
At the technical level, the S&P 500 is now testing the descending trendline drawn from recent highs — a zone that could serve as short-term resistance. The Relative Strength Index (RSI) is approaching the midpoint (50), indicating that momentum, while improving, hasn’t yet shifted decisively bullish. If the index breaks above 5,400, additional resistance levels lie at 5,455 and 5,485 before a challenge of the key 5,500 mark comes into view.
S&P 500 daily chart
Past performance is not a reliable indicator of future results.
By Daniela Sabin Hathorn, senior market analyst at Capital.com
