U.S. financial markets took a sharp dive on Monday after President Donald Trump publicly lashed out at Federal Reserve Chair Jerome Powell, calling him “a major loser” for his reluctance to cut interest rates. In a heated social media post, Trump accused Powell of reacting too slowly to signs of an economic downturn, pressing for immediate rate cuts to stave off what he warned could be a significant slowdown. The president’s latest attack adds to his ongoing campaign to pressure the central bank into easing monetary policy.
Markets reacted swiftly to the president’s remarks, with the S&P 500 falling 2.4%, the Dow Jones down 2.5%, and the Nasdaq dropping over 2.5%—bringing year-to-date losses to nearly 18% for tech stocks. The dollar also took a hit, plunging to its lowest point since 2022, as confidence in U.S. financial leadership wavered. U.S. Treasury yields rose, indicating investor anxiety, even as traditional safe-haven assets like the dollar and bonds failed to offer stability.
Gold, on the other hand, soared to a record high, breaking the $3,400 mark as nervous investors sought shelter from the turmoil. The ripple effect extended to global markets, with Asian indices like Japan’s Nikkei and Australia’s ASX 200 dipping slightly, while Hong Kong’s Hang Seng posted modest gains. The volatility underscores the growing unease among investors over both U.S. economic policy and the Federal Reserve’s ability to act independently in a high-pressure political environment.
Trump’s ongoing feud with Powell has intensified in recent weeks, with the president even floating the idea of removing him—a move widely seen as controversial and potentially illegal. Despite Powell’s assertion that the Fed must remain independent, Trump’s advisers have hinted at exploring his dismissal. This unprecedented tension between the White House and the Fed comes at a time when central bank credibility is crucial, especially as Trump’s tariff policies continue to fuel inflation concerns and threaten to stall growth.
Source: Arise