S&P 500 closes higher as Nvidia gains, traders shake off Trump’s latest Fed salvo

The S&P 500 closed higher on Tuesday as Wall Street looked beyond President Donald Trump’s removal of Federal Reserve Governor Lisa Cook from the central bank’s board and awaited quarterly figures from chip giant Nvidia.

The broad market S&P 500 settled up 0.41% at 6,465.94. The tech-heavy Nasdaq Composite also added 0.44% to end the day at 21,544.27. The blue-chip Dow Jones Industrial Average added 135.60 points, or 0.30%, to finish at 45,418.07.

Long-term Treasury yields rose after the Trump move, while short-term yields declined as investors steepened the yield curve on the notion rates may go lower in the short-term, but eventually go higher as a politicized Fed becomes less attentive to inflation. The U.S. dollar index, which measures the greenback against a basket of major currencies, was last down 0.2%.

Cook plans to file a lawsuit challenging her removal by the president, her attorney said. The Fed said it “will abide by any court decision” on the matter.

“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” lawyer Abbe Lowell said in a statement. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis.”

Trump’s unprecedented move adds to the pressure the president has been putting on the central bank’s independence. By law, a president may only remove a Fed governor “for cause.”

There are currently six members on the Fed’s board, with one seat vacant after the resignation of Adriana Kugler earlier this month. Removing Cook would leave five members, with non-Trump appointees still holding a majority. However, if Stephen Miran is cleared for the Kugler vacancy and the president is successful in removing Cook, it would give Trump a 4-3 majority.

If Fed Chair Jerome Powell leaves his seat voluntarily after his term expires in May, it would give the president a fifth vote.

Investors already appeared hopeful about the prospect of lower interest rates coming in September, as hinted at by Powell last week in Jackson Hole, Wyoming. They’re additionally looking ahead to Nvidia’s earnings report on Wednesday, which could bolster the megacap tech trade following its recent slide. The “Magnificent Seven” stocks rallied Friday, but only after five straight days of losses.