On Monday, the stock markets experienced a decline as investors monitored developments in trade discussions and reacted to President Donald Trump’s ongoing criticism of Federal Reserve Chairman Jerome Powell. The Dow Jones Industrial Average saw a decrease of 971.82 points, equivalent to 2.48%, with the S&P 500 and Nasdaq Composite also dropping by 2.36% and 2.55%, respectively.
President Trump criticized Powell in a Truth Social post, arguing that energy and food prices were “substantially lower” and claimed there was “virtually No Inflation.” Trump stated that despite these declining costs, the economy could slow unless Powell, whom he referred to as “Mr. Too Late” and a “major loser,” decided to reduce interest rates promptly.
These remarks followed a previous post by Trump on Truth Social, where he described Powell as “always TOO LATE AND WRONG,” and suggested that Powell’s termination should occur as soon as possible.
The shares of major technology companies, dubbed the “Magnificent Seven,” were also impacted, with Tesla’s shares dropping over 5% and Nvidia’s declining by more than 4%. Trump’s persistent criticisms of Powell increased concerns about the Federal Reserve’s independence in establishing monetary policy, further denting investor confidence in U.S. assets that were already affected by trade tariffs.
Federal Reserve Bank of Chicago President Austan Goolsbee commented on this issue during a CBS “Face the Nation” interview. He emphasized the critical significance of central bank and monetary policy independence, expressing hope that monetary independence would not be called into question, as it could undermine the Fed’s credibility.
Investors remained wary about tariffs following China’s warning against striking deals unfavorable to Beijing. Fed policymakers highlighted an uncertain interest-rate outlook due to tariff issues. According to LSEG-compiled data, traders are anticipating around 90 basis points of interest rate cuts from the Federal Reserve this year.
The combination of trade and monetary policy uncertainty has negatively affected the stock market throughout the year, with the S&P 500 experiencing a decline of over 15% from its February peak.