: Dow, S&P 500, Nasdaq climb as Trump eyes Powell replacement amid rate cut hopes- US stock market today saw fresh gains on Thursday, with investors digesting new signals of a possible shift in monetary policy as President Donald Trump, currently serving in the White House, appears to be getting closer to naming a successor to Federal Reserve Chair Jerome Powell. The move could reshape market expectations for interest rate cuts ahead of the next Fed leadership. The Dow Jones Industrial Average (^DJI) gained roughly 200 points, rising 0.4%, while the S&P 500 (^GSPC) also edged up 0.4%, inching closer to its first record close since February. The Nasdaq Composite (^IXIC) added about 0.3% as major tech names, including Nvidia (NVDA), continued their upward momentum. Nvidia was marginally higher after hitting a record high on Wednesday.

President Trump’s dissatisfaction with Jerome Powell’s “wait and see” stance on interest rates is pushing him to potentially announce a new Fed chair nominee by September or October, according to The Wall Street Journal. This development has rattled monetary policy watchers and traders, who now view it as a sign that rate cuts may come sooner than expected.

If Trump does name a successor, Powell’s influence could weaken well before his term ends in May 2026, and markets may start focusing on the next chair’s likely policy path. Trump has been vocal about wanting lower interest rates to support economic growth and counteract the drag from tariffs and debt risks. Here's how major indexes performed Thursday:

The overall tone was optimistic across Wall Street as traders grew more confident that Trump’s direction could lean toward monetary easing. The US dollar index (DX=F) dropped to its lowest level since April 2022, reflecting rising expectations of looser monetary policy. A weaker dollar typically boosts US exports and corporate earnings but also signals caution over tariff impacts and default risks. At the same time, Treasury yields pulled back, with the 10-year yield (^TNX) trading around 4.26%, down from earlier levels. Investors seem to be factoring in a higher probability of cuts in borrowing costs, which tend to lower bond yields and make stocks more attractive. Fresh data from Thursday showed the US economy shrank by 0.5% in the first quarter, according to the government's final estimate—worse than the previous reading. This contraction is adding to concerns about underlying economic weakness.

At the same time, jobless claims rose, with continuing claims climbing to their highest level since late 2021, suggesting some softness in the labor market. These numbers are likely to further bolster the argument for the Fed—or a new chair appointed by Trump—to consider rate cuts in the near term.

The big market-moving event to end the week comes Friday with the release of the Personal Consumption Expenditures (PCE) inflation report, the Fed’s preferred inflation gauge. Investors will closely examine whether Trump’s tariff policies have begun to impact consumer prices.

If the report shows a meaningful uptick in inflation, it could complicate Trump’s push for interest rate cuts. On the other hand, tame inflation could pave the way for a more dovish Fed—or the next Fed chair—to act sooner.

What does this mean for rate cuts and market momentum?

Between Trump’s expected Fed chair announcement, weaker economic growth, rising jobless claims, and a falling dollar, the setup for a potential shift toward rate cuts is building. Traders are increasingly betting that the Fed could pivot, especially if the PCE data supports the argument for easing.

Markets will remain highly sensitive to any hints from Trump or the Fed in the coming days, as investors try to price in the likely path for interest rates in the second half of 2025.

Stocks rose on hopes of interest rate cuts after Trump hinted at replacing Fed Chair Powell.

It may increase chances of rate cuts, but Friday’s PCE data will reveal if tariffs raised prices.