No Fed Rescue for Trump’s Market Bulls

Don’t Count on a ‘Powell Put’ This Week, Economist Warns

Investors hoping for Federal Reserve intervention amid market volatility may be out of luck. Fed Chair Jerome Powell is unlikely to signal any support measures when policymakers meet this week, despite recent stock market weakness.

“The upside risks to inflation suggest that, despite the recent downturn in equities, the chances of a ‘Powell put’ are slim,” said Stephen Brown, deputy chief U.S. economist at Capital Economics.

A “Powell put” refers to the expectation that the Fed will step in with rate cuts or other measures if markets decline sharply—a notion dating back to the 1987 stock crash, when then-Fed Chair Alan Greenspan swiftly lowered interest rates. But Powell has consistently signaled a cautious, data-driven approach, making a policy pivot unlikely in the near term.

Investors received a similar message last week from former President Donald Trump, who dismissed concerns that his aggressive tariff policies could hurt the economy. In a television interview, he suggested that any short-term pain would be outweighed by long-term trade benefits, effectively ruling out a “Trump put.” That stance forced markets to reassess the likelihood of policy relief from the White House.

As a result, stocks have struggled under persistent uncertainty. The S&P 500 posted its fourth consecutive weekly loss, with the Nasdaq Composite slipping into correction territory. The Dow Jones Industrial Average and the small-cap Russell 2000 also approached key technical levels before rebounding on Friday—coincidentally, a day when Trump remained silent on trade matters.

More than immediate economic damage, investors fear that prolonged uncertainty around tariffs and policy direction could stifle business investment, hiring, and growth, setting the stage for a slowdown.

“The unpredictability of policymaking is more damaging than the tariffs themselves,” said Kevin Gordon, senior investment strategist at Charles Schwab. “Companies can adapt to tariffs if they know what to expect. The real problem is constantly changing policies.”

That uncertainty is reflected in consumer sentiment. The University of Michigan’s consumer confidence index fell to a 29-month low in March, highlighting growing economic anxiety. Meanwhile, markets have priced in three potential rate cuts for 2025, anticipating weaker growth ahead.

But the Fed faces the same unpredictability as investors. The central bank’s dual mandate—balancing inflation control with full employment—complicates its decision-making. A mix of rising inflation and policy-driven job losses makes it difficult for Powell to justify rate cuts.

Given this backdrop, Powell is expected to stick to his patient, wait-and-see approach. Earlier this month, he emphasized that sentiment readings don’t always translate to real economic shifts, reinforcing the Fed’s cautious stance.

For investors, that means prioritizing quality. Stocks of companies with strong balance sheets, steady earnings growth, and low volatility have been among the most resilient during recent market turmoil. In uncertain times, financial stability remains key.