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Stocks experienced a significant decline on Monday as Wall Street resumed trading following a shortened week, coinciding with President Trump’s latest disparagement of Federal Reserve Chair Jerome Powell, labeling him a “major loser.”
In late afternoon trading, the S&P 500 dropped by 158 points, equivalent to a 3% decrease, landing at 5,124, while the Dow Jones Industrial Average fell by 1,159 points, also reflecting a 3% decline. The Nasdaq Composite, heavily weighted towards technology, saw an even sharper decline, plummeting by 3.2%.
Investor sentiment soured amid ongoing uncertainties regarding tariffs and the upcoming earnings reports from prominent U.S. tech firms. Global market activity was muted, as several international markets, including those in Europe, Hong Kong, and Australia, remained closed for Easter Monday.
In parallel developments, the dollar index sank to its lowest point since 2022, indicating a depreciation of the currency, while gold prices surged to new record highs. The increase in long-term treasury yields along with these trends suggests that investors are growing increasingly apprehensive about the security of U.S. assets.
Challenges Facing Powell
This turbulent start to the trading week follows a previous period of market volatility, as stakeholders weigh the impacts of the Trump administration’s tariffs alongside potential shakeups within the Federal Reserve. Tim Duy, chief economist at SGH Macro Advisors, commented in a research note that despite recent reprieves for certain electronic goods, tariffs imposed on China are currently stalling portions of trade activity.
The stock market faced headwinds last week when Powell warned that the tariffs could elevate U.S. inflation and impede growth. There are ongoing discussions within Trump’s administration regarding the possibility of dismissing Powell, who was appointed to lead the Fed in 2017. Although many analysts contend that Trump lacks the constitutional authority to terminate a Fed chair, his critical remarks have ignited investor anxieties over a potential breach of longstanding conventions.
On Truth Social, Trump argued that the economy could slow unless Powell acts promptly to lower interest rates, describing him as “Mr. Too Late, a major loser.” The President’s increasing pressure for the Fed to cut rates aims to stimulate economic growth, yet many fear such moves might inadvertently exacerbate inflation.
Adam Crisafulli, head of Vital Knowledge, expressed concerns about the implications of Powell’s remaining term, which extends beyond a year. He suggested that the ongoing tension between the Fed and the White House could escalate significantly in the coming months if not addressed.
A landmark ruling from the Supreme Court in 1935 solidifies the independent authority of the Fed, complicating any potential dismissal of Powell before his term concludes on May 15, 2026. However, this has not deterred Trump from persistently targeting Powell, who has remained steadfast in resisting pressure to reduce interest rates prior to obtaining clearer economic insights on how tariffs will influence the economy.
Chicago Fed President Austan Goolsbee emphasized the importance of maintaining monetary independence in an interview, warning that any challenge to this independence could undermine the credibility of the Federal Reserve.
Technology Sector in Focus
This week, investors are placing significant attention on corporate earnings from major technology giants, collectively known as the “Magnificent Seven,” which includes Amazon, Alphabet (Google’s parent company), Apple, Meta Platforms (Facebook’s parent), Microsoft, Nvidia, and Tesla.
Recently, stocks belonging to these tech titans have fluctuated dramatically amid the Trump administration’s imposition of reciprocal tariffs, followed by a sudden exemption for specific high-tech products announced subsequently.
Since Trump’s inauguration on January 20, the combined market capitalization of the Magnificent Seven has seen a decline of $3.8 trillion, or 22%, as of April 20.
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