Stocks fell again on Monday as President Donald Trump ramped up his attacks on Federal Reserve Chair Jerome Powell, raising questions about the central bank’s independence, while traders received few signs of progress on global trade talks.
The Dow Jones Industrial Average dropped 971.82 points, or 2.48% to close at 38,170.41. The S&P 500 shed 2.36% and ended at 5,158.20, and the Nasdaq Composite lost 2.55% to settle at 15,870.90.
“Magnificent Seven” tech titans dragged the major indexes lower, with Tesla and Nvidia respectively losing 5.8% and more than 4%. Amazon shed 3%, as did Meta Platforms. Equipment manufacturer Caterpillar declined 2.8%.
In a Truth Social post, Trump claimed that the economy would slow unless Powell — who he referred to as “Mr. Too Late, a major loser” — lowered interest rates immediately. This follows another post last week in which Trump also called for the Fed to lower rates, even hinting at Powell’s “termination” — something White House economic advisor Kevin Hassett said the president’s team was studying.
The dollar was also under pressure, hitting a three-year low as the threats ramped up. Gold, meanwhile, soared to record highs above $3,400 per ounce.
“One of the things that is becoming very clear is the underlying tension between the Fed and the administration,” said Michael Green, chief strategist of Simplify Asset Management.
“We are effectively in a replay of COVID. The uncertainty has meaningfully disrupted trade … I think most people anticipate that there will be some form of stimulus that ultimately emerges to offset the effects of the tariff.”
Lack of progress on trade
Investor confidence was also dented by a lack of progress on global trade. If anything, tensions seemed to increase with China with the country warning other nations not to strike any deal with the U.S. that would hurt Beijing.
The S&P 500 is down 9% since since April 2, when Trump announced a raft of levies on imports from other countries. The Nasdaq has lost nearly 10% in that time, and the Dow has fallen 9.6%.
“We’re really thinking about this as a bit of an endless environment in terms of direction … and that’s in particular because we just don’t know where tariffs end up,” said Robert Haworth, senior investment strategist at U.S. Bank, in an interview with CNBC. “This is a market trying to get clarity on direction, and not getting a lot of conclusions.”
Haworth added: “If uncertainty continues for an extended period of time — meaning multiple quarters — I think that becomes more challenging for corporate earnings and decision making, and we’ve seen some of that in the earnings season so far.”
