Stocks Plunge Amid Trump’s Criticism of Fed Chair Powell and Ongoing Tariff Uncertainty

On Monday, the stock market experienced a significant downturn as Wall Street returned from a shortened trading week. President Trump intensified his criticism of Federal Reserve Chair Jerome Powell, labeling him a "major loser." The S&P 500 dropped 125 points, or 2.4%, closing at 5,158. The Dow Jones Industrial Average plummeted 972 points, or 2.5%, to 38,170. The tech-heavy Nasdaq Composite fell even more steeply, declining by 2.5%.

Investor Concerns

Investors are grappling with ongoing tariff uncertainty and eagerly awaiting the release of U.S. tech companies earnings this week. Global activity remained muted on Monday, with many markets around the world, including Europe, Hong Kong, and Australia, closed for Easter Monday. In the foreign exchange market, the dollar index slid to its lowest level since 2022, diminishing the currency's value, while gold reached a record high. These movements, along with the rise in long-term treasury yields, indicate growing concerns among investors about the safety of U.S. assets.

Market Reaction to Tariffs

The tumultuous start for the U.S. stock market on Monday followed a week of volatility. Investors are weighing the potential impact of tariffs imposed by the Trump administration and the possibility of a Fed shakeup on economic activity. Last Wednesday, Fed chief Powell warned that tariffs could increase U.S. inflation and hinder growth, leading to a decline in stocks.

Trump's Criticism of Powell

President Trump has escalated his pressure on Powell to lower the Fed's benchmark interest rate, which could stimulate economic growth but also risk inflating prices. Despite the legal challenges to firing Powell, Trump's constant attacks have stoked investor fears about a potential shakeup at the Fed. A landmark Supreme Court ruling from 1935 affirms the independent authority of the Fed, making it difficult to remove Powell before his term concludes on May 15, 2026. However, Trump's criticism continues to raise concerns about the potential undermining of the Fed's credibility.

Focus on Technology Earnings

This week, investors are also keenly focused on the corporate earnings reports from major technology players, known as the "Magnificent Seven": Amazon, Google-parent Alphabet, Apple, Facebook-parent Meta Platforms, Microsoft, Nvidia, and Tesla. The stocks of these companies have experienced significant fluctuations in recent weeks due to tariff uncertainties. As of April 20, the combined market value of the Magnificent Seven has declined by $3.8 trillion, or 22%, since Trump's inauguration on January 20.