Stocks drop as Trump intensifies criticism of Powell

US stocks closed sharply lower Monday as President Donald Trump escalated attacks on Federal Reserve Chair Jerome Powell and trade uncertainty deepened.

In a post on Truth Social, Trump claimed that inflation in the US is virtually nonexistent and energy prices are declining. He warned that without rate cuts, the economy could slow down.

Trump’s public push to remove Powell rattled Wall Street. He criticized the Fed chief for not cutting rates and called him a “major loser.” 

All three major indices plummeted. The Dow tumbled 972 points (2.48%), while the S&P 500 and Nasdaq dropped 2.36% and 2.55%, respectively. Nearly all Dow and S&P 500 stocks fell.

According to the Wall Street Journal, the Dow is on track for its worst month since 1932.

The US dollar index also fell over 1%, hitting its lowest level in over three years.

Analysts warn that undermining the Fed’s independence could weaken market confidence.

Meanwhile, safe-haven assets surged. Gold jumped over 3% to a record $3,400 an ounce, rising 30% year-to-date. Meanwhile, the 10-year Treasury yield rose above 4.4%.

The market also reacted to stalled trade talks with Japan, suggesting prolonged negotiations. Investors now await the Fed’s May meeting and a wave of Q1 earnings reports. 

It’s common knowledge that President Trump has had issues with the Fed Chair since the pandemic and has tried to oust Powell before.

The latest tiff between the two arises due to interest rates. Trump wants the Fed to reduce them, while the central bank wants inflation to reach 2% before making any moves.