Wall Street, the Dollar, and Yields Tumble Over Fed Independence
Trump stated that the economy would slow unless Powell—whom he referred to as “Mr. Too Late, a big loser”—lowered interest rates.
Quick overview
- Stocks fell sharply on Wall Street, with the S&P 500 dropping 2.9% amid rising concerns over tariffs and President Trump's criticism of the Federal Reserve.
- The dollar weakened significantly, while gold prices soared to an all-time high as investors sought safe havens.
- Trump's public attacks on Fed Chairman Powell and calls for immediate interest rate cuts have raised questions about the central bank's independence.
- Geopolitical tensions and fears of recession are compounding market instability, leading to increased anxiety among investors.
Stocks fell on Wall Street Monday, as rising concerns over tariffs and President Donald Trump’s criticism of the Federal Reserve undermined investor confidence.
This, in turn, pushed the dollar lower and sent gold—often seen as a safe haven—soaring to a new all-time high.
The S&P 500 dropped 2.9%, the Nasdaq Composite fell 3.2%, and the Dow Jones slid 2.8%. The decline follows Trump’s sharp attack on Fed Chairman Jerome Powell last Thursday, with reports suggesting that his team is considering the possibility of removing Powell—an action that would raise questions about the central bank’s independence and further erode confidence in U.S. assets.
The Technology sector led the downturn, falling 3.5%, followed by Consumer Discretionary, down 3.2%, and Energy, which fell 2.7%. Many markets were closed on Friday, and some, including much of Europe, were still on holiday for Easter Monday, resulting in low liquidity.
Geopolitical tensions were already weighing on markets, but now growing fears that Trump could interfere with the Fed add another layer of uncertainty. Any sign of political pressure on monetary policy could undermine the Fed’s independence, complicating the path of interest rates just when investors are looking for stability amid global volatility.
Stock Market Tanks as Trump Doubles Down on Fed Criticism, Pressing for Rate Cuts
The U.S. stock market is plummeting this Monday as President Trump escalates his criticism of Powell, pushing for immediate interest rate cuts. Increasing trade tensions have fueled recession fears in the U.S., causing both the dollar and long-term Treasury bonds to fall sharply.
Trump publicly supported preventive rate cuts, labeling Powell a “failure,” which raises questions about the Fed’s independence and shakes market confidence. U.S. analysts warn that the central bank’s loss of autonomy could lead to more unpredictable decisions, destabilizing the market.
In a post on Truth Social, Trump stated that the economy would slow unless Powell—whom he referred to as “Mr. Too Late, a big loser”—immediately lowered interest rates. This follows another post last week where Trump also called for a rate cut and even hinted at Powell’s possible “removal,” a move that, according to White House economic adviser Kevin Hassett, the president’s team was considering.
Stocks hit their lowest points of the day following Trump’s post on Monday. The dollar was also under pressure, falling to its lowest level in three years as the threats increased. Meanwhile, gold surged to historic highs, surpassing $3,400 per ounce.
Investors Face New Macro-Economic Anxiety: Trump’s Threats to Fed Independence
Investors now face a new source of macroeconomic anxiety: Trump’s threats to the Fed’s independence. This threat is closely tied to his trade war, as Powell and his colleagues are forced to stay neutral amid the potential for an inflationary rebound driven by tariffs in the coming months, despite recent market volatility and growing downside risks to growth.
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