US STOCKS-Wall Street wobbles after Trump denies plans to fire Powell

Updates with early afternoon prices

By Pranav Kashyap and Nikhil Sharma

July 16 (Reuters) - U.S. stock indexes pared losses on Wednesday after President Donald Trump said it was "highly unlikely" that he would fire Federal Reserve Chair Jerome Powell, minutes after several reports said he was likely to do so.

The main U.S. stock indexes fell sharply earlier, the dollar plunged and Treasury yields rose after Bloomberg News reported the possibility of replacing Powell, citing an unidentified White House official.

Separately, Reuters News reported , citing a source, that Trump is open to the idea of firing Powell.

Trump was quick to deny the reports, even as he unleashed a new barrage of criticism against the Fed chair for not cutting interest rates.

"Any rhetoric between and Jerome Powell and Donald Trump is noise to me. We aren't making any portfolio considerations or changes," said David Wagner, head of equities at Aptus Capital Advisors LLC.

"The market understands that the new Fed chair tends to be announced a year ahead of time which should be upcoming in the next few months. There is no reason for Trump to negate the arm’s-length distance between the Federal Reserve and the executive branch in the wake of a new Fed Chair being named in the next month or two."

The benchmark S&P 500 fell as much as nearly 1% following the reports, but clawed back from those losses following Trump's comments.

At 12:03 p.m. ET, the Dow Jones Industrial Average .DJI rose 24.56 points, or 0.05%, to 44,047.85, the S&P 500 .SPX lost 4.16 points, or 0.07%, to 6,239.25 and the Nasdaq Composite .IXIC lost 29.77 points, or 0.14%, to 20,648.03.

The CBOE Volatility Index .VIX, Wall Street's "fear gauge," hit an over a three-week high earlier but eased from those levels.

Trump has repeatedly criticized Federal Reserve monetary policy in recent months, angry over the central bank's refusal to cut interest rates. Fed officials have resisted cutting rates until there is clarity on whether Trump's tariffs on U.S. trading partners reignite inflation.

A recent Supreme Court ruling suggests no change to the long-held understanding that the law prohibits a president from firing a Fed chair over a policy difference.

(Reporting by Pranav Kashyap and Nikhil Sharma in Bengaluru; additional reporting by Medha Singh; Editing by Saumyadeb Chakrabarty and Maju Samuel)

((pranav.kashyap@tr.com; +919886482111;))