Dow Jones Industrial Average

For the stock market, it's all about the Fed

In this image, Jerome speaks while adjusting his glasses.
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.

Wall Street realizes the trade war is real

Stocks on Monday had their worst day since January. The Dow Jones Industrial Average fell 618 points, while the S&P 500 dropped 2.4% and the Nasdaq closed down 3.4%.

Data: Money.NET; Chart: Harry Stevens/Axios

Why it matters: The stock market has largely ignored potential threats of a U.S.-China trade deal falling through. That changed today when China announced it would retaliate against U.S. actions by raising tariffs to 25% on $60 billion worth of U.S. imports (effective June 1).