The U.S. financial markets plunged on Monday as President Donald Trump intensified his criticism of Federal Reserve Chair Jerome Powell, reigniting fears over central bank independence and economic instability. In a scathing social media post, the president labeled Powell “a major loser” and called for immediate, pre-emptive interest rate cuts to stimulate the economy.
“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” President Trump wrote, criticizing Powell for being too slow in responding to economic signals. His remarks add to a series of escalating attacks on the Fed chief, whom he appointed during his first term.
The market response was swift and severe. The S&P 500 fell 2.4%, extending its losses to 12% for the year. The Dow Jones Industrial Average dropped 2.5%, while the tech-heavy Nasdaq tumbled more than 2.5%, now down around 18% since January.
Traditionally viewed as safe havens during times of market volatility, the dollar and U.S. government bonds were also affected. The dollar index dropped to its lowest level since 2022, and interest rates on U.S. Treasuries rose as jittery investors demanded higher returns.
The turmoil spilled over to global markets, with trading in Asia-Pacific remaining subdued. Japan’s Nikkei 225 and Australia’s ASX 200 edged down by 0.1%, while Hong Kong’s Hang Seng inched up by 0.2%.
Amid the economic uncertainty, gold soared to record highs, with spot prices crossing $3,400 per ounce for the first time. Investors are increasingly turning to gold as a hedge against potential economic shocks.
President Trump’s clash with Powell dates back to his first term, and recent reports suggest his administration is now actively exploring the controversial and legally questionable move of firing the Fed chair. This comes despite Powell’s assertion last year that the president lacks the authority to remove him.
With President Trump’s proposed tariffs already rattling markets, his renewed pressure on the Federal Reserve is adding fuel to recession fears, deepening concerns over economic policy and the future direction of the U.S. economy.
