US stocks rallied on Thursday, with the Nasdaq up more than 2 per cent at one point, the S & P 500 up nearly 1.5 per cent and the fear gauge VIX hovering around 27. President Donald Trump appeared to be reassessing some of the more aggressive approaches he has taken on trade and the Fed. "Now that the market has recovered a fair amount of ground lost, it can start to build on that momentum," said David Lauter, chief investment officer at Abound Financial, an investment firm. "While the market recovery won't be a straight line, it's encouraging to see markets start pricing in the environment after the tariffs are removed." Stocks were buoyed by bets that the Fed would cut interest rates sooner than expected. Mr. Waller, the Fed governor, said he would support a rate cut if the tariffs cost jobs. Meanwhile, Cleveland Fed President Michael Hamack said officials could take action as early as June if there is clear evidence of where the economy is headed.