Economy
U.S. Stocks Fall After Trump Criticizes Federal Reserve
Apr
U.S. stocks markets declined after Donald Trump harshly criticized Federal Reserve Chair Jerome Powell, demanding immediate rate cuts. The drop came amid signs of a potential recession and escalating trade war tensions.
Impact on indexes
As of 10:35 a.m., the S&P 500 had fallen 2.1%, while the Nasdaq 100 dropped 2.5%. On Truth Social, Trump called Powell a “loser” and demanded “preemptive” cuts, questioning the Fed’s independence, which triggered uncertainty in financial markets.
Fed independence at stake
Joe Saluzzi of Themis Trading noted that markets don’t respond well to attacks on the Fed’s independence, which could lead to erratic decisions and greater economic uncertainty.
Effects on the dollar and bonds
The dollar and Treasury bonds fell, pushing the yield on 30-year bonds higher. Fears over inflation and economic growth are rising, as markets expect at least three rate cuts this year.
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Trump’s stance
Trump insisted inflation is nearly nonexistent and rate cuts must happen immediately. However, the Fed’s preferred inflation index still exceeds its target, complicating the outlook.
Markets down
Since the tariff announcement, the S&P 500 has dropped nearly 9%, with notable declines in Nvidia, Delta Air Lines, and Constellation Energy. Netflix, however, reported record earnings.
Dollar and impeachment threats
Speculation that Trump may try to remove Powell added to the uncertainty, causing the dollar to fall to a 15-month low. Experts say Trump legally cannot dismiss Powell, but tensions persist.
Upcoming corporate results
This week, Tesla, Alphabet, Boeing, and Intel will release earnings, with Tesla facing a reputation crisis tied to Elon Musk’s behavior and trade tensions. The full impact of tariffs has yet to materialize.
China responds to the trade war
In a new turn in the trade conflict, China voiced opposition to any U.S. agreements with third parties that threaten its strategic interests, further heightening global tensions.
