Stocks rose Wednesday on hopes that U.S.-China trade tensions could soon ease, while President Donald Trump signaled he does not plan to remove Federal Reserve Chair Jerome Powell from his post as central bank leader.

The Dow Jones Industrial Average popped 419.59 points, or 1.07%, to close at 39,606.57. The S&P 500 climbed 1.67% to end at 5,375.86, and the Nasdaq Composite rallied 2.50% and settled at 16,708.05. All three indexes posted back-to-back gains.

However, the major averages ended the session well off their highs. At one point Wednesday morning, the blue-chip Dow added more than 1,100 points, and the S&P 500 was up 3.44%.

Trump said Tuesday he is willing to take a less confrontational approach to trade talks with China, noting that the current 145% tariff on Chinese imports is "very high, and it won't be that high. … No, it won't be anywhere near that high. It'll come down substantially. But it won't be zero."

Treasury Secretary Scott Bessent also said Wednesday that both countries have the chance to make "a big deal" on trade. "If they want to rebalance, let's do it together," he said.

"That's what the market has been begging for — even just a hint of cooling down in the back and forth between the U.S. and China when it comes to trade," said Keith Buchanan, portfolio manager at Globalt Investments. "The market is relieved, of course — the worst talk is hopefully behind us — but we're still not at the end game."

The Wall Street Journal also reported Wednesday, citing a White House official, that the administration was considering reducing China tariffs to between 50% and 65%. A White House official later told CNBC that such a move would have to be bilateral, however, with China lowering trade barriers as well.

Stocks with higher exposure to China that have sold off in recent weeks rallied. This included "Magnificent Seven" titans Apple and Nvidia, which were up over 2% and more than 3%, respectively.

Shares of Tesla popped 5% also due to easing tariff pressures and after CEO Elon Musk said during the company's Tuesday earnings call that his time spent running Trump's so-called Department of Government Efficiency will drop "significantly" starting next month.

Investors breathed a sigh of relief as Trump also said he has "no intention" of firing Powell, whose term as Fed chair will end in May 2026. The comment is a reversal of sorts for the president, who fired off barbs against Powell as recently as Monday, calling the central bank leader a "major loser" and demanding that interest rates come down. Just last week, Trump said in a Truth Social post that Powell's "termination cannot come fast enough."