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Stock markets got over their case of the Mondays really quick this week, and after regaining all their Monday losses on Tuesday, are roaring even higher as Wednesday gets off the ground.
Financial stocks are doing particularly well this morning. As of 10:20 a.m. ET, shares of Bank of America (NYSE: BAC) are gaining a respectable 2.8%, while JPMorgan Chase (NYSE: JPM) is doing even better with a 3.6% rise, and American Express (NYSE: AXP) is doing best of all -- up 5.4%.
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The American stock market's big news day
What's behind the optimism? President Donald Trump, of course.
After spooking markets earlier in the week with threats to oust Federal Reserve Chairman Jerome Powell, Trump ratcheted back the rhetoric this morning, even going so far as to assure investors he has "no intention" of firing Powell (or at least not until the end of his term of office next May). This promise, for as long as it lasts, may be of particular reassurance to financial investors as they're more closely tied to moves by the Fed than anyone else, and were presumably more worried than others about what political pressure on the Fed might do to interest rate policy.
Meanwhile, in tariffs news, the president held out the prospect of falling tariffs on China, which holds the potential to both reduce strain on the American economy and -- potentially -- short-circuit an incipient global trade war that seemed all but certain to happen as recently as Monday. Both prospects diminish the chance of the U.S. falling into recession this year, and that's music to investors' ears.
Referring to tariffs on Chinese imports that have reached levels capable of potentially ending trade between the two countries entirely, the president opined that once negotiations run their course, tariffs on Chinese goods will probably come down "substantially." Forget 145% tariffs. They soon "won't be anywhere near that high."
Is it time to buy bank stocks?
Worries over tariff policy, and the recession risk they raise, have been especially concerning to the banking and credit card industries, reports The Wall Street Journal. As recently as this morning, that paper reported on how credit card companies are bracing for an economic downturn in which consumers stop spending because imported goods have become simply too expensive to buy.
All three of the banks named above were cited in the story, with Amex in particular warning that "consumers are holding off on nonessential splurges" and JPMorgan said to be ratcheting up reserves against an expected recession. The good news is that BofA says consumers are, for now, "still solidly in the game," however. And if Trump ends up calling off his trade war in time to avert a recession, things could turn out as well as investors today seem to feel they will.