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US financial markets plunged dramatically on Monday as President Donald Trump intensified his attacks on Federal Reserve Chair Jerome Powell, calling him "a major loser" for not lowering interest rates quickly enough. The S&P 500 fell 2.4%, the Dow Jones Industrial Average dropped 2.5%, and the Nasdaq tumbled more than 2.5%.
Trump demanded Powell cut interest rates "pre-emptively" to boost the economy, writing on social media: "There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW." This latest criticism follows Trump's earlier call for Powell's termination last Thursday when he wrote, "Powell's termination cannot come fast enough."
The president's confrontational stance has added significant turbulence to markets already concerned about his proposed tariff policies. Since January, the S&P has lost approximately 12% of its value, the Dow is down about 10%, and the Nasdaq has plummeted roughly 18%. The S&P 500 is now 16% below its February record high, approaching bear market territory.
"The fact that we're down so much today after a long weekend tells me investors went into the weekend, they looked at the situation, and they see more uncertainty, not less uncertainty," said Adam Sarhan, chief executive at 50 Park Investments in New York.
Investors are fleeing to safe-haven assets amid the growing uncertainty. Gold reached an unprecedented high of $3,430.18 per ounce on Monday, while the dollar index dropped to its lowest level since March 2022. Against the Swiss franc, the dollar fell to a decade-low position.
Robert Pavlik, senior portfolio manager at Dakota Wealth, emphasized Powell's stabilizing influence: "He's a steady hand, he's a known entity, he's stability in a world of uncertainty. He brings that calmness to the market, something people can rely on that hasn't changed while all this chaos is going on."
The Fed has maintained its benchmark policy rate between 4.25% and 4.50% since December, following a series of rate cuts late last year. Powell previously warned that Trump's proposed import taxes would likely increase prices and slow economic growth.
Chicago Fed President Austan Goolsbee expressed concern on Sunday about the central bank's independence, stating he hopes the United States isn't "moving to an environment where the ability of the central bank to set monetary policy independent of political pressure is questioned."
White House economic adviser Kevin Hassett confirmed on Friday that officials were studying the option of removing Powell, despite questionable legal authority. Powell himself stated last year that he did not believe the president had the legal authority to remove him.
Oil prices also fell more than 2% on Monday, with Brent crude futures down to $66.26 a barrel and U.S. West Texas Intermediate crude dropping to $63.08. Meanwhile, Asian markets showed subdued trading on Tuesday morning, with Japan's Nikkei 225 and Australia's ASX 200 both down about 0.1%, and Hong Kong's Hang Seng declining around 0.5%.
As first-quarter earnings continue to roll in, with reports from major companies like Google's parent Alphabet due this week, investors and businesses alike are grappling with an increasingly uncertain economic landscape shaped by escalating tensions.
