US stock indexes slide 3% as Trump harangues Powell

Wall Street’s main indexes each slid to more than one-week lows on Monday after U.S. President Donald Trump doubled down on attacks against Federal Reserve Chair Jerome Powell, amplifying concerns about the central bank’s autonomy and rattling markets.

Trump repeated his criticism of Powell, saying in a Truth Social post that the economy could slow down unless interest rates are lowered immediately. That followed comments by White House economic adviser Kevin Hassett on Friday that Trump and his team would study if firing Powell was an option.

Trump’s continued criticism of the Fed chair has heightened worries about the central bank’s ability to independently formulate monetary policy in the world’s largest economy, undermining investor confidence in U.S. assets already diminished by Trump’s tariffs.

The S&P 500 was down 3.35% Monday afternoon, in trading somewhat thinned by the absence of numerous overseas markets that remained closed for Easter. The Nasdaq Composite was down 3.63% and the Dow Jones Industrial index was down 3.26%. The U.S. dollar index was down 0.47% and selling of the 10-year Treasury note pushed its yield up 7.4 basis points to 4.4008%.

COMMENTS:

NATE GARRISON, CHIEF INVESTMENT OFFICER, WORLD INVESTMENT ADVISORS, WASHINGTON, IOWA

“The theme of the market for the last several weeks has been uncertainty. As uncertainty increases, the market goes in the other direction and for investors, it’s just easier to take some chips off the table. Then, over the weekend, we got no good news, in the form of profess on tariffs, but we heard more about Trump wanting to fire Powell. He has been such a steady hand at the Fed with a consistent approach to managing policy and reacting to the economy that has provided a lot of comfort, so just the threat of removing him sends a bit of a shudder up peoples’ spines.”

BRIAN NICK, MANAGING DIRECTOR & HEAD OF PORTFOLIO STRATEGY, NEWEDGE WEALTH, STANFORD, CT

“It’s not good when you have inflation, interest rates and the dollar all lower on the same day, over the same week and the same month. That kind of pattern tends to occur in emerging markets; it doesn’t happen in the United States. It’s a sign that people don’t want to hold your currency any more and that even your bonds aren’t appealing.

“This is the first day we’ve had a selloff this big without major tariff news. But I’m actually oddly encouraged by some of what we’re hearing the president say about Powell now. He seems to be pivoting from wanting to fire him, which would be remarkably disruptive, to preparing to blame him for whatever the fallout is from all these policies. Also, while if the president fires Jerome Powell it would be incredibly disruptive and would lead to a further steepening of the yield curve because investors would conclude that a politicized Fed can no longer be trusted to manage inflation, I think Powell could still stay on as a member of the FOMC. Then, too, the FOMC is not a dictatorship: removing Powell wouldn’t change the fact that other members might still vote along the same lines. Someone may have pointed out here to the president that a firing might cause more problems than it solves.”

KRISTIAN KERR, HEAD OF MACRO STRATEGY, LPL FINANCIAL, Charlotte, NORTH CAROLINA (by email)

“The decline can be attributed to a mix of the absence of positive tariff updates over the weekend, Trump’s continued comments on Fed independence, and the U.S. being one of the few major markets open on Monday. With trading volume generally light, the lack of liquidity is probably amplifying the sell-off.”

“The market is feeling extremely fragile right now, with the uncertainty surrounding tariffs as a backdrop. So that’s why you can see the market selling off on news about Fed independence and Powell – and not just the stock market, but across assets, in the bond and the foreign exchange markets as well. Broadly, global investors are moving away from being overweight US assets. We’re definitely looking at making more structural changes to our portfolio than we normally would on these developments, but so far we haven’t done anything more than increase our risk hedges over the last weeks or months.”