Stocks extended a two-day rally Wednesday as comments from President Trump eased investor concerns over an escalating trade war with China and risks to the independence of the Federal Reserve.

On Tuesday night, Trump told reporters he has "no intention of firing" Federal Reserve Chair Jerome Powell, reversing a recent market narrative that had contributed to a nearly 1,000-point loss in the Dow Jones Industrial Average ( ^DJI ) on Monday. In the same meeting with the press, Trump also hinted at a deescalation in a trade war with China, telling reporters the 145% tariffs on the country will "come down substantially."

Read more: The latest news and updates on Trump's tariffs

The comments prompted some strategists to suggest that the president may now be watching and taking into account market reaction to his policies more than he did previously. The Trump administration had previously asserted they weren't watching the stock market amid a massive sell-off .

"Trump's recent comments around Powell, his soothing words around China, all tell you that Trump is starting to 'feel the market,'" Renaissance Macro head of economics Neil Dutta wrote.

Trump's fresh comments helped provide a key boost to stocks. Piper Sandler chief investment strategist Michael Kantrowitz wrote in a note to clients on Wednesday that "Trump's policy rhetoric" is the main thing driving markets right now. This has created binary market action where news of tariff deescalation has sent stocks higher while fears of a stiffer stance from the administration have sent stocks lower.

"While we don't think we're out of the woods, we must respect history and how market corrections begin to find their footing as the primary problem begins to 'heal,'" Kantrowitz wrote. "[Tuesday's Trump comments were] an incremental step in the right direction."

The S&P 500 ( ^GSPC ) was up more than 3%. The Dow Jones Industrial Average ( ^DJI ) added 1,100 points or 2.8%. The Nasdaq Composite ( ^IXIC ) led the gains, soaring 4.1%. The rally took another leg higher after the Wall Street Journal reported that China's tariff rate is expected to fall from 145% to 50% to 65%.

The softening of Trump's comments comes after his recent social media post saying that "Powell's termination cannot come fast enough." The post contributed to growing market concerns and weighed on stocks to start the week as equity strategists said the potential firing of Powell could send bond yields soaring higher and weigh on stock prices. The 10-year Treasury yield quickly shot up to 4.4% on Monday.