US stocks and the dollar tumbled Monday as investors assessed continued tariff uncertainty and the implications of President Donald Trump’s ongoing mission to try and oust Federal Reserve Chair Jerome Powell. The Dow fell 850 points, or 2.17%. The broader S&P 500 fell 2.26%. The tech-heavy Nasdaq Composite slid 2.67%. Stock futures had slumped in premarket trading after the three major indexes closed last week in the red. The US dollar index, which measures the dollar’s strength against six foreign currencies, slumped 1% to its lowest level in more than three years. Wall Street has been on edge since Trump on Thursday lashed out at Powell and said on social media that his “termination cannot come fast enough!” Trump lambasted Powell for not cutting interest rates — a complaint he has levied multiple times against the Fed chair. The diatribe came as the European Central Bank cut its benchmark interest rate and after Powell spoke last week of the potential economic consequences of Trump’s tariff agenda. “If I want him out, he’ll be out of there real fast, believe me,” Trump told reporters in the Oval Office Thursday. “I’m not happy with him.” Trump on Monday continued his tirade against Powell, calling him a “major loser” in a social media post pressuring the central bank leader to lower interest rates. Director of the National Economic Council Kevin Hassett on Friday told reporters that the Trump administration “will continue to study” the possibility of removing Powell. Hassett said he wants to look into “new legal analysis” before determining whether Trump can or should terminate Powell — a break from his previous comments stressing the Fed’s independence. While many experts say the president does not in fact have the power to fire the Fed chief due to policy differences, Trump has made clear he’s willing to break with norms and precedent, even in the face of potentially monumental repercussions. Powell on Wednesday said at an event in Chicago said Trump’s tariffs were unlike anything in modern history, with the potential to stoke inflation and drag on economic growth. The stark warning highlights that tariffs could complicate the Fed’s rate-cutting path. Trump, who appointed Powell during his first term, has long bickered with the Fed chair over interest rates. The Fed’s independence from politics is a hallmark of the central bank, and analysts overwhelmingly expect markets to react negatively to an attempt to fire Powell. Trump’s attack on the Fed’s independence has also raised concerns that investors might lose confidence in the stability of US markets. “President Trump’s renewed criticism of Fed Chair Powell this week is a reminder that trade policy is not the only channel through which the administration’s unconventional approach could undermine the dollar and US asset markets,” said Jonas Goltermann, senior markets economist at Capital Economics, in a Thursday note. Dollar under pressure as confidence wavers When stocks slump, investors usually seek out safe havens like US government bonds and the dollar. Yet investors are selling the dollar while other safe havens, like gold, are soaring. The dollar has broadly weakened this year in a potential sign of waning confidence in the US. Krishna Guha, vice chairman at Evercore ISI, said in a Friday note that “recent market action shows a loss of confidence in Trump economic policy,” citing higher Treasury yields and a weaker dollar. Analysts at Macquarie said in a Monday note that “flight from the USD” stems from “concerns over the Fed’s independence” and a lack of trade deal announcements, signaling that negotiations over tariffs might last many months. The yield on the 10-year Treasury rose to 4.365% on Monday, up from Thursday. US trading was closed Friday in observance of Good Friday. The Fed’s board of governors is scheduled to meet the first week of May to determine its next decision on its benchmark interest rate. About 88% of traders expect the Fed to hold rates steady, according to the CME FedWatch tool. “Powell reiterated that the Fed is likely to remain in wait-and-see mode as it assesses the effect of tariffs on the economy,” analysts at Morgan Stanley said in a Monday note. Gold on Monday surged more than 2% and hit a fresh record high above $3,400 a troy ounce. The yellow metal has been on a tear this year as investors flock to safe havens. Gold is up more than 27% this year, outpacing its gain across 2024. Wall Street this week will also digest a slate of first-quarter earnings results. Investors will likely be attuned to chief executives’ guidance and forecasts for the year amid heightened tariff uncertainty. Tesla (TSLA) is scheduled to report earnings after the bell on Tuesday. Alphabet (GOOGL) is expected to report earnings on Thursday. “Tariffs will remain top of mind over the coming few months, yet investors are likely to refocus their short-term attention on the Q1 2025 earnings reporting period,” said Sam Stovall, chief investment strategist at CFRA Research, in a Monday note. This is a developing story and will be updated.
US stocks tumble and dollar hits three-year low as Trump continues to bash Fed Chair Powell
TruthLens AI Suggested Headline:
"U.S. Stocks Decline and Dollar Weakens Amid Trump’s Criticism of Fed Chair Powell"
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TruthLens AI Summary
U.S. stocks and the dollar experienced significant declines on Monday as investors grappled with ongoing uncertainties surrounding tariffs and President Donald Trump's continued criticism of Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average dropped 850 points, a decrease of 2.17%, while the S&P 500 fell by 2.26%, and the Nasdaq Composite saw a decline of 2.67%. This downturn followed a week where all three major indexes closed in the red. The U.S. dollar index, which evaluates the dollar's performance against six foreign currencies, fell by 1%, reaching its lowest point in over three years. The market's unease was exacerbated by Trump's remarks on social media, where he expressed dissatisfaction with Powell's handling of interest rates, labeling him a "major loser" and suggesting that his removal could happen swiftly if he desired. Trump's remarks came on the heels of the European Central Bank's interest rate cut and Powell's warnings about the potential economic impacts of Trump's tariff policies.
In light of Trump's aggressive stance towards Powell, concerns about the Federal Reserve's independence have intensified. While many experts argue that Trump lacks the authority to dismiss Powell based on policy disagreements, the president's willingness to challenge established norms raises alarms about the potential ramifications for U.S. financial markets. Analysts have noted a decline in confidence regarding Trump's economic policies, as evidenced by a weakening dollar and rising Treasury yields. Some experts predict that the Fed will maintain its current interest rates during its upcoming meeting, as it assesses the broader economic implications of tariffs. Meanwhile, gold prices surged, reflecting a shift in investor sentiment towards safer assets amidst market volatility. As Wall Street prepares for first-quarter earnings reports from major companies, including Tesla and Alphabet, the focus will remain on how these companies navigate the prevailing tariff uncertainties and their impact on future forecasts.
TruthLens AI Analysis
The recent article highlights significant fluctuations in US financial markets, particularly the stock market and the value of the dollar, amidst President Trump's ongoing criticisms of Federal Reserve Chair Jerome Powell. This situation reflects not only economic concerns but also political tensions that can influence investor sentiment.
Market Reactions to Political Actions
The report notes the sharp decline in major stock indices, with the Dow falling 850 points and the S&P 500 and Nasdaq also experiencing considerable drops. Such declines often indicate investor unease, especially in the face of political instability or uncertainty regarding economic policy. Trump's public disdain for Powell's monetary policy decisions, particularly his reluctance to cut interest rates, adds to this anxiety. This scenario illustrates how political rhetoric can directly impact financial markets, as investors may fear the implications of presidential interference in central bank operations.
Public Sentiment and Perception
Trump's derogatory remarks about Powell, referring to him as a "major loser," aim to paint the Fed chair as ineffectual and to rally public support for a potential change in leadership at the Federal Reserve. This rhetoric can be seen as an attempt to sway public opinion against Powell, which could serve to justify any future actions Trump might take regarding Powell's position. The article suggests a deliberate strategy to align public sentiment with Trump's agenda, emphasizing dissatisfaction with current economic policies.
Implications for Economic Policy
The ongoing debate over Powell's termination raises questions about the independence of the Federal Reserve. While many experts assert that Trump lacks the authority to remove Powell based solely on policy disagreements, this situation highlights the potential for a shift in the traditional boundaries between political power and monetary policy. Such a shift could have long-lasting effects on the credibility of the Fed and its ability to manage the economy effectively.
Broader Context and Connections
This article connects to a larger narrative about the tensions between economic stability and political influence. The timing of Trump's criticisms coincides with actions taken by other central banks, such as the European Central Bank's rate cut, which may further amplify concerns about the US economy's competitiveness on a global scale. The interplay between domestic policies and international economic factors creates a complex landscape for investors.
Potential for Future Manipulation
Given the strong language and targeted criticism, there are implications for manipulation within the financial markets. The use of social media to convey dissatisfaction can influence not just investor behavior but also public discourse. By framing Powell as a scapegoat for broader economic issues, Trump may be attempting to divert attention from other challenges facing his administration.
In conclusion, the article presents a nuanced view of how political dynamics can shape economic realities. The criticisms aimed at Powell not only serve to highlight Trump's frustrations but also reflect deeper concerns about the impact of such rhetoric on financial markets and economic policy.