Washington, DC – US stocks and the dollar took a hit as President Donald Trump intensified his criticism of Federal Reserve Chair Jerome Powell, labeling him as a “major loser” for not implementing interest rate cuts to stimulate the economy.
Trump’s ongoing clash with Powell, whom he appointed during his first term, has added further instability to the markets. The stock market saw significant drops with the S&P 500 falling by approximately 2.4% on Monday, marking a 12% decrease since the beginning of the year. Similarly, the Dow Jones Industrial Average plummeted by 2.5% and the Nasdaq dropped more than 2.5%, with losses of around 10% and 18% respectively since January.
Even traditionally safe assets like the dollar and US government bonds have not been immune to the recent market turmoil. The dollar index, which measures the dollar’s strength against various currencies, hit its lowest point since 2022 on Monday. Additionally, interest rates on the US government debt rose as investors sought higher returns.
Meanwhile, amidst the market instability, the price of gold surged to a record high as investors turned to “safe-haven” assets. Spot gold surpassed $3,400 per ounce for the first time on Monday, reflecting a common trend of investors seeking stability during economic uncertainties.
Trump’s critiques of Powell date back to his first term, with previous discussions of potentially firing him. The recent escalation in criticism followed Powell’s warnings about the adverse effects of the president’s import taxes on prices and the economy. Trump publicly called for Powell’s termination, emphasizing his frustration with the Federal Reserve Chair’s decisions regarding borrowing costs.
The ongoing tension between the president and Powell has raised concerns about the Fed’s independence, with discussions around the legal feasibility of removing Powell from his position. Despite Powell’s stance on the matter, Trump’s economic advisers confirmed that the option of removing Powell was under consideration, leading to further uncertainties in the market.
