US financial markets witnessed another drop following President Donald Trump¡¯s renewed criticism of Federal Reserve Chair Jerome Powell. Trump once again demanded immediate rate cuts and blamed Powell for slowing the economy. The statement sent shockwaves through stocks, bonds, and the dollar, amplifying concerns about a potential recession.
In a post on social media, Trump lashed out at Powell, calling him ¡°a major loser¡± and insisting that he cut interest rates ¡°pre-emptively.¡± He warned of a possible slowdown unless Powell acted fast, referring to him as ¡°Mr. Too Late.¡± Trump¡¯s public pressure campaign against Powell has been ongoing, but this latest round comes amid falling investor confidence and economic uncertainty.
The Federal Reserve, traditionally seen as an independent body, has come under repeated attack from Trump since his first term. He has accused Powell of not responding swiftly to economic changes and even discussed removing him from office¡ªthough Powell has maintained that the president doesn¡¯t have the legal authority to do so.
The result of the escalating tension between Trump and the Fed was visible across US stock indices. The S&P 500, which includes 500 leading American firms, fell by approximately 2.4% on Monday. Since the start of the year, the index has dropped around 12%.
Similarly, the Dow Jones Industrial Average slipped 2.5% and is now down nearly 10% year-to-date. The tech-heavy Nasdaq also lost over 2.5% on the day and has declined nearly 18% since January. These steep drops underline how political tensions and economic policies are weighing heavily on investor sentiment.
Even assets traditionally seen as safe during turbulent times weren¡¯t spared. The dollar index, which compares the US currency to others like the Euro, dropped to its lowest point since 2022.
As US markets struggled, other global markets also showed mild weakness. In Asia, Japan¡¯s Nikkei 225 and Australia¡¯s ASX 200 dipped by about 0.1%, while Hong Kong¡¯s Hang Seng index dropped by roughly 0.5%.
Meanwhile, gold prices surged as investors turned to safer options. Spot gold touched an all-time high, crossing $3,400 per ounce on Monday. The metal is often seen as a reliable asset during times of economic stress.
While interest in US government bonds usually increases during market uncertainty, investors are now demanding higher returns on these assets. This has pushed up interest rates on government debt.
Trump¡¯s frustration with Powell has been consistent, dating back to when he first appointed him. Recently, Trump even called for Powell¡¯s removal in a social media post, stating that ¡°Powell¡¯s termination cannot come fast enough.¡± However, the legal path to removing a sitting Fed chair remains unclear.
One of Trump¡¯s top economic advisors confirmed last week that the administration was actively exploring whether such a move could be made. These discussions occurred while US markets were closed, further fuelling concerns about policy instability.
As this continues, both domestic and global investors remain watchful, uncertain how the ongoing friction between the White House and the Fed will shape the economic outlook.