US stock markets suffered steep losses Monday as investors grappled with ongoing trade‑war uncertainty and President Donald Trump’s aggressive campaign to remove Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average dropped 972 points (2.48%), the S&P 500 slid 2.36%, and the Nasdaq Composite fell 2.55%, extending a red‑hot sell‑off that has left all three major indexes on track for their worst month since 2022.
Stock Markets Snapshot:
- Dow Jones: –972 points (–2.48%)
- S&P 500: –2.36%
- Nasdaq Composite: –2.55%
- Dollar Index: down over 1% to a three‑year low
- 10‑Year Treasury Yield: above 4.4%, up from last Thursday
Trump vs. Powell: Political Pressure Rattles Stock Markets
Wall Street’s nerves were frayed after Trump on Thursday publicly lashed out at Jerome Powell, tweeting that his “termination cannot come fast enough!” The president faulted Powell for not cutting interest rates and threatened to fire him—comments that broke with the Fed’s long‑cherished independence. On Monday, Trump escalated his rhetoric, labeling Powell a “major loser” and renewing calls for rate cuts.
Kevin Hassett, director of the National Economic Council, admitted the administration is exploring “new legal analysis” to determine whether the president can oust the Fed chief. Yet most experts contend Trump lacks the authority to fire Powell over policy disagreements.
“I don’t think Wall Street likes the fact that the president is trying to control monetary policy, which would certainly not be a good thing over the long term,” said Sam Stovall, chief investment strategist at CFRA Research.
Fed Chair Powell had warned in Chicago last week that Trump’s tariffs—unprecedented in modern history—could stoke inflation and crimp growth. Those comments, coupled with the European Central Bank’s surprise rate cut, underscore the fragility of global monetary policy.
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Dollar Weakness and Gold’s Rally
Investors typically flock to the U.S. dollar and Treasuries during equity sell‑offs. Instead, the dollar weakened to its lowest level in over three years, while gold surged more than 3% to a record high above $3,400 an ounce. Gold is now up about 30% year‑to‑date, eclipsing its 27% gain in 2024.
- Flight from the dollar: Macquarie strategists point to “concerns over the Fed’s independence” and stalled trade talks as drivers of USD weakness.
- Treasury yields rise: The 10‑year yield topped 4.4%, reflecting shifting expectations for future monetary policy.
Krishna Guha, vice chairman at Evercore ISI, noted that recent market moves signal “a loss of confidence in Trump economic policy,” with a weaker dollar and higher bond yields as evidence.
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Looking Ahead: Fed Meeting and Earnings Season
All eyes now turn to the Federal Reserve’s May policy meeting. About 88% of traders expect the Fed to hold rates steady, according to the CME FedWatch tool. Morgan Stanley analysts agree that the central bank is likely to remain in “wait‑and‑see mode” as it gauges the impact of tariffs on the U.S. economy.
Meanwhile, corporate earnings will test investor sentiment. After a 5.75% drop on Monday, Tesla (TSLA) reports Q1 results after the bell on Tuesday. Alphabet (GOOGL), which fell 2.31%, follows on Thursday. CFRA’s Stovall warns that, while tariffs dominate headlines, “investors are likely to refocus their short‑term attention on the Q1 2025 earnings reporting period.”
With tariffs unresolved and presidential pressure on the Fed intensifying, the road ahead for U.S. stock markets remains uncertain. Investors will be watching Washington and Wall Street closely for signs of stabilization—or further turbulence—this week.
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