Stock market slumps as Trump renews criticism of Federal Reserve Chair Jerome Powell
Stocks took a nosedive on Monday as Wall Street resumed trading after a shortened week and President Trump once again targeted Federal Reserve Chair Jerome Powell, calling him a “major loser.” The S&P 500 plummeted 125 points, or 2.4%, closing at 5,158, while the Dow Jones Industrial Average saw a 972-point drop, or 2.5%, ending at 38,170. The Nasdaq Composite, which is heavily tech-focused, also experienced a sharp decline of 2.5%.
The market turmoil comes amidst ongoing tariff uncertainty and anticipation surrounding the upcoming earnings reports from major U.S. tech companies this week. With many global markets closed for Easter Monday, trading activity remained relatively light. However, the dollar index fell to its lowest level since 2022, causing the value of the currency to weaken, while gold prices reached another record high. These movements, along with the increasing long-term treasury yields, reflect growing concerns among investors regarding the safety of U.S. assets.
According to Chris Zaccarelli, chief investment officer for Northlight Asset Management, investors are feeling uneasy and are shifting towards selling stocks and bonds while investing in gold. This shift in sentiment is attributed to weakening confidence among global investors, exacerbated by news of threats to the Fed’s independence and uncertainties surrounding the global economic order.
The market volatility on Monday follows a turbulent week as investors grapple with the potential impact of the Trump administration’s tariffs and the uncertainty surrounding Fed policies. Fed Chair Powell’s recent warning about the inflationary effects of tariffs further added to market jitters. President Trump has been vocal in his criticism of Powell, even suggesting the possibility of firing him. However, legal experts believe that Trump lacks the authority to dismiss a Fed chief before their term ends.
The ongoing tension between the White House and the Federal Reserve has raised concerns among investors about the stability of the financial markets. Powell has been resolute in his stance against cutting interest rates prematurely, emphasizing the need for more economic data to gauge the impact of tariffs on the economy. Despite Trump’s pressure to lower interest rates, Powell remains committed to maintaining the Fed’s independence.
In addition to the Fed-related uncertainties, investors are closely monitoring the corporate earnings reports of major technology companies known as the “Magnificent Seven.” These companies, including Amazon, Google-parent Alphabet, Apple, Facebook-parent Meta Platforms, Microsoft, Nvidia, and Tesla, have been under scrutiny due to the fluctuating market conditions driven by trade tensions and regulatory challenges.
The market value of the Magnificent Seven has seen a significant decline since Trump’s inauguration, with a collective loss of $3.8 trillion or 22% as of April 20. The tech sector remains in focus as investors navigate through the uncertainty surrounding trade policies and the broader economic landscape.
As the market continues to grapple with external pressures and internal conflicts, investors remain cautious about the future outlook. The ongoing trade tensions, coupled with the unpredictability of Fed policies, present a challenging environment for market participants. The coming weeks will be crucial as investors await further developments that could impact the financial markets.
