Rate rage returns: Trump demands 'a full point' rate cut from Fed, Wall Street cheers as jobs data signals resilience
Wall Street surged Friday after a better-than-expected US jobs report and a blistering social media tirade by President Donald Trump demanding a full percentage point interest rate cut from the Federal Reserve.
The sharp remarks, delivered in trademark all-caps on Trump's Truth Social platform, were aimed at Fed chair Jerome Powell for failing to act aggressively despite a cooling inflation environment.
'Too Late' at the Fed is a disaster! Europe has had 10 rate cuts, we have had none,' Trump wrote, insisting the Fed should 'go for a full point, Rocket Fuel!' and sharply criticizing the Biden administration's reliance on short-term borrowing.
'There is virtually no inflation (anymore), but if it should come back, RAISE 'RATE' TO COUNTER. Very Simple!!! He is costing our Country a fortune.'
Meanwhile, the S&P 500 index jumped 1.2% in morning trading, heading for its second straight weekly gain. The Dow Jones Industrial Average climbed 555 points, or 1.3%, to 42,874.34, while the tech-heavy Nasdaq Composite rose 1.3%, lifted by a rebound in major technology names.
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The rally was broad-based, with all 11 sectors of the S&P 500 in positive territory.
Investors appeared to shrug off concerns about economic headwinds, drawing optimism from Friday's Labour Department data that showed employers added 139,000 jobs in May. While slower than April's revised figure of 147,000, the pace of hiring suggested continued labour market resilience despite Trump's trade policies and regulatory crackdowns.
Trump's volatile tariff regime and threats against trading partners have drawn sharp criticism from US businesses. Retailer Lululemon plunged nearly 20% after cutting its annual profit guidance, blaming rising costs linked to Trump's import taxes. The fallout added to warnings from other sectors, including airlines and consumer goods firms, about margin pressure and potential demand slowdown.
Still, Friday's bounce in equities was helped by hopes that the Trump administration could ease tensions with key partners.
A reported 'very good' phone call between Trump and Chinese President Xi Jinping raised optimism for progress in trade negotiations, although Chinese state media adopted a more cautious tone.
Bond yields rose, reflecting shifting expectations for interest rate policy. The yield on the 10-year Treasury increased to 4.47% from 4.39% a day earlier, while the 2-year yield rose to 4.00%, up from 3.92%, indicating growing investor bets that the Fed could eventually pivot toward easing.
Tesla shares recovered 3.6% following Thursday's dramatic 14.5% plunge, triggered by Trump's escalating feud with Elon Musk. The president had threatened to use executive powers to cut off federal contracts to Musk's companies, wiping out nearly $150 billion in Tesla's market value within a single session. The rebound came as both sides reportedly agreed to 'cool off' amid backchannel talks arranged by White House aides.
In global markets, European indexes posted modest gains while Asian equities were mixed. India's Sensex rose 0.8% after the Reserve Bank of India cut its benchmark interest rate to 5.50%, marking a dovish shift as inflation eases.
Oil prices remained stable, with US crude at $63.30 per barrel and Brent crude at $65.31. The dollar strengthened slightly against the yen, while the euro slipped to $1.1414, reflecting lingering caution in currency markets.
As the Fed heads into its policy meeting later this month, markets remain on edge. Trump's aggressive push for a large rate cut and his public criticism of Fed Chair Jerome Powell have reignited debate about central bank independence — and whether political pressure will influence the future trajectory of US interest rates.
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