The S&P 500 ended Tuesday’s trading session in positive territory, buoyed by significant gains in major stocks like Nvidia and Eli Lilly. This upward movement occurred against a backdrop of heightened political concerns following President Donald Trump’s dismissal of Federal Reserve Governor Lisa Cook, an action that has sparked worries about the central bank’s autonomy.
Market focus was sharply on Nvidia, which saw its shares rise 1.1% ahead of its highly anticipated quarterly earnings report due Wednesday. The results are seen as a critical barometer for both the AI sector and the company’s resilience amid ongoing U.S.-China trade tensions. In a major development for the healthcare sector, Eli Lilly’s stock jumped almost 6% after the company announced its experimental pill achieved a 10.5% reduction in body weight for diabetes patients.
The market experienced brief volatility after President Trump announced the removal of Fed Governor Cook late Monday, citing alleged improprieties in obtaining mortgage loans. This move deepened existing anxieties about political interference in the traditionally independent Federal Reserve. S&P 500 futures initially sank on the news, but the market quickly recovered as investors refocused on the unchanged expectation that the Fed will begin cutting interest rates in September.
Despite lingering inflation pressures, traders are firmly pricing in a 25-basis-point cut for the September meeting. This expectation is bolstered by dovish signals from Fed Chair Jerome Powell, recent data indicating labor market weakness, and the ongoing shakeup at the central bank. Analysts like Bill Merz of U.S. Bank Wealth Management note that while long-term Fed independence is a concern, the short-term trajectory for easier monetary policy in the next 6-12 months appears set, though key upcoming economic data could still prompt a reassessment.
