US stock markets and the dollar experienced sharp declines after President Donald Trump launched a scathing verbal attack on Federal Reserve Chair Jerome Powell. In his latest criticism, Trump accused Powell of failing to act quickly enough to reduce interest rates and stimulate the slowing economy. The President’s comments have intensified economic uncertainty, with major stock indices and the dollar showing signs of significant instability. As fears of an economic slowdown grow, markets worldwide have been rattled by the ongoing feud between Trump and the Fed.
President Pressures Fed to Cut Rates Now
On social media, President Trump ramped up his criticism of Powell, calling the Fed Chair “a major loser” for not cutting interest rates in a timely manner. Trump demanded an immediate rate cut to counter the economic slowdown, accusing Powell of reacting too slowly to mounting economic signs of weakness. In a post, Trump wrote, “Mr. Too Late, a major loser, must lower rates now or the economy will slow.”
Trump’s remarks marked a new chapter in his long-standing dissatisfaction with Powell, a Federal Reserve appointee he originally selected. The president’s calls for preemptive action come at a time when the US economy shows signs of stagnation, with concerns about rising inflation and global trade tensions. The growing friction between the Trump administration and the central bank is sending shockwaves through the financial markets.
Market Reactions Reveal Economic Anxiety
The backlash against Powell’s policies has deepened investor anxiety, contributing to a notable downturn in US stock markets. The S&P 500, a key indicator of the US economy, dropped by 2.4% on Monday, continuing a downward trajectory that has erased 12% from its value since the start of the year. The Dow Jones Industrial Average fell 2.5%, adding to its 10% year-to-date decline. Similarly, the Nasdaq Composite plunged by more than 2.5%, bringing its total loss to approximately 18% since January.
Despite its reputation as a safe haven during times of financial crisis, even the US dollar showed signs of distress. The dollar index slipped to its lowest level since 2022, weakening against major global currencies. At the same time, yields on US government bonds rose, indicating that investors are seeking higher returns to offset the increasing risks associated with holding long-term US debt.
Global Markets Reflect Growing Unease
Markets outside the US mirrored the volatility seen in US stock indices. Trading in the Asia-Pacific region was generally subdued. Japan’s Nikkei 225 and Australia’s ASX 200 both experienced slight losses, dipping by 0.1%. Conversely, Hong Kong’s Hang Seng managed to edge up by 0.2%, offering a small degree of optimism amid the global economic turbulence.
The instability in major markets highlights the far-reaching effects of Trump’s verbal clashes with Powell, as well as broader concerns about economic performance worldwide. These market movements underscore the increasing unease among investors, who are increasingly uncertain about the direction of both the US economy and the global financial landscape.
Gold Surges as Investors Seek Stability
Amid the economic volatility, investors flocked to safe-haven assets, driving the price of gold to historic highs. On Monday, spot gold prices surged past $3,400 per ounce, reaching a new all-time record. Gold, traditionally seen as a protective asset during financial instability, has become the go-to option for investors seeking stability in the face of market upheaval. The rise in gold prices reflects broader concerns over the potential long-term impact of ongoing economic uncertainty.
Tensions Over Fed Independence Grow
Trump’s discontent with Jerome Powell has been an ongoing theme since his first term in office. According to reports, Trump had even considered removing Powell back then, but the central bank’s independence complicated any efforts to do so. Since his return to office, Trump has repeatedly pressured Powell to cut interest rates, arguing that such measures are necessary to prevent further economic deterioration.
Last week, Trump made his dissatisfaction clear by publicly calling for Powell’s removal, saying online, “Powell’s termination cannot come fast enough.” However, removing Powell would present significant legal challenges, as the Federal Reserve is designed to operate independently from political influence. Powell himself has previously stated that he believes the president does not have the legal authority to dismiss him. Despite this, Trump’s senior advisers have indicated that they are reviewing the possibility of such an action, even amidst the ongoing market volatility.
The escalating tension between President Trump and Federal Reserve Chair Jerome Powell has added another layer of uncertainty to an already volatile economic landscape. As US stock markets and the dollar continue to struggle, the global financial community is left grappling with the potential consequences of a prolonged conflict between the executive branch and the central bank. With fears of a broader economic slowdown looming, the situation remains fluid, and markets are likely to remain on edge in the weeks to come.
