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Jerome Powell speaks at a news conference on May 1, 2019. Photo: Mark Wilson/Getty Images

U.S. stocks have had a major reaction after Fed Chair Jerome Powell's policy meetings, a pattern that continued Tuesday when the S&P 500, the Dow and the Nasdaq all had their largest one-day gains in five months after Powell said the central bank would act "as appropriate" to address risks to the economy.

Why it matters: The U.S. trade war that could include China, Mexico, the EU, India and others has dominated the conversation in business circles over the past month, but Tuesday's price action showed nothing moves stocks like Powell and the Fed.

What he said: During opening remarks for a speech in Chicago, Powell began by addressing "recent developments involving trade negotiations."

  • "We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective."

What the market heard: "'Act as appropriate.' That phrase from Powell this morning has clearly opened the door to a cut in coming quarters," said BMO Capital Markets rate strategist Joe Hill. "As a result, the operative question has become whether the cut comes in June or September, and whether the move will be 25 [basis points] or 50."

  • Hill and other bond market investors now say they would not be surprised to see yields on the benchmark U.S. 10-year note fall to 1.80%.
  • Big bank stocks surged, Bloomberg noted, as Wells Fargo analyst Mike Mayo said the industry would be set to "party like it's 1995" if rates were cut.

Of note: Powell's comments follow remarks from St. Louis Fed president James Bullard on Monday that also insinuated the Fed was open to cutting rates. It continues a theme of Powell's Fed speaking with a unified voice, breaking with the past actions of policymakers.

Go deeper: To protect the Fed, Jerome Powell gets political

Go deeper

Dion Rabouin, author of Markets
9 mins ago - Economy & Business

First glimpse of the Biden market

Photo: Jonathan Ernst-Pool/Getty Images

Investors made clear what companies they think will be winners and which will be losers in President Joe Biden's economy on Wednesday, selling out of gun makers, pot purveyors, private prison operators and payday lenders, and buying up gambling, gaming, beer stocks and Big Tech.

What happened: Private prison operator CoreCivic and private prison REIT Geo fell by 7.8% and 4.1%, respectively, while marijuana ETF MJ dropped 2% and payday lenders World Acceptance and EZCorp each fell by more than 1%.

Mike Allen, author of AM
41 mins ago - Politics & Policy

Biden-Harris, Day 1: What mattered most

President Joe Biden and first lady Dr. Jill Biden arrive at the North Portico of the White House. Photo: Alex Brandon-Pool/Getty Images

The Axios experts help you sort significance from symbolism. Here are the six Day 1 actions by President Biden that matter most.

Driving the news: Today, on his first full day, Biden translates his promise of a stronger federal response to the pandemic into action — starting with 10 executive orders and other directives, Caitlin Owens writes.

2 hours ago - Politics & Policy

Read: Pete Buttigieg's opening statement ahead of confirmation hearing

Pete Buttigieg, President Biden's nominee to be secretary of transportation, in December. Photo: Kevin Lamarque/AFP via Getty Images

Pete Buttigieg, President Biden's nominee to lead the Transportation Department, will tell senators he plans to prioritize the health and safety of public transportation systems during the pandemic — and look to infrastructure projects to rebuild the economy — according to a copy of his prepared remarks obtained by Axios.

Driving the news: Buttigieg will testify at 10 a.m. ET before the Senate Committee on Commerce, Science and Transportation. He is expected to face a relatively smooth confirmation process, though GOP lawmakers may press him on "green" elements of Biden's transportation proposals.