US stocks and dollar sink after Trump criticises Fed chair again

New York — US stock indices fell and the dollar index slid to a three-year low on Monday as US President Donald Trump’s continued attacks on the Federal Reserve chair and the central bank’s monetary policy rattled investors.

Safe-haven gold prices hit another record high, while the Swiss franc also rose. Benchmark US treasury yields edged higher.

Trump on Monday repeated his criticism of Fed chair Jerome Powell and said the US economy could slow down unless interest rates are lowered immediately.

Trump said the US economy could slow unless interest rates are lowered immediately.

“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr Too Late, a major loser, lowers interest rates, NOW,” Trump said in a post on Truth Social.

The comments, and the administration’s seemingly intensifying pressure on a Fed chair Trump has stated he would like to see gone, sent stock markets lower and bond yields higher as investors and analysts mulled the fallout should Trump ignite a fight over the Fed’s monetary policy independence and try to remove Powell before the end of his term a little over a year from now.

It is not clear Trump has the authority to do so, and even if successful the Fed’s governance structure would give the remaining board members and regional bank presidents say over interest rate decisions — potentially forcing the White House into a deeper assault on the Fed’s seven-member board of governors.

Trump’s repeated threats to fire Powell come as he tries to goad the Fed into quickly cutting interest rates to mitigate a widely expected economic slowdown and possible harm to the labour market due to his tariff and other policies, while Fed policymakers urge caution on concerns inflation, which remains above their 2% target, could be pushed higher by the import taxes.

The Fed next meets on May 6-7 and is widely expected to hold the benchmark interest rate steady in the current 4.25% to 4.50% range.

Pressure

“Trump’s comments on Powell are keeping the pressure on US assets, including stocks and the long Treasuries,” said Vail Hartman, US rates strategist at BMO Capital Markets in New York.

Chicago Federal Reserve president Austan Goolsbee said on Sunday that he hoped the US was not moving to an environment where the ability of the central bank to set monetary policy independent of political pressure was questioned.

“The impact of tariffs on the macroeconomy could potentially be modest,” Goolsbee said. “We don't know what the impact on the supply chain is going to be so I think we want to be a little more of a steady hand and try to figure out the through line before we're jumping to action.”

The Dow Jones industrial average fell 971.82 points, or 2.48%, to 38,170.41, the S&P 500 fell 124.50 points, or 2.36%, to 5,158.20 and the Nasdaq Composite fell 415.55 points, or 2.55%, to 15,870.90. The S&P 500 closed 16% below its February 19 record closing high. 

MSCI’s gauge of stocks across the globe fell 7.78 points, or 0.98%, to 785.64.

Most markets were closed on Friday and some, including most of those in Europe, remained on holiday for Easter Monday, leading to thinner than usual liquidity.

Against a basket of currencies, the dollar slid as low as 97.923, its lowest since March 2022. The currency also fell to a decade-low against the Swiss franc, while the euro briefly broke above $1.15.

The euro was last up 0.94% at $1.1498. Against the Japanese yen, the dollar weakened 0.98% to 140.78. Against the Swiss franc, the dollar fell 1.07% to 0.808.

Cryptocurrencies rose. Bitcoin gained 3.88% to $88,384.03. Ethereum rose 3.07% to $1,638.04.

The yield on benchmark US 10-year notes rose 1.9 basis points to 4.346%, from 4.327% late on Thursday.

Spot gold rose 2.6% to $3,414.91/oz at 1.26pm GMT. Prices hit a record high of $3,424.25 earlier in the session.

Trump’s tariffs have roiled financial markets in recent weeks and also remain a big concern for investors.

China on Monday accused Washington of abusing tariffs and warned countries against striking a broader economic deal with the US at its expense, ratcheting up its rhetoric in the recent trade war between the countries.

First-quarter results from US companies continue to roll in, with reports from top names such as Alphabet due this week.

Companies and investors are grappling with a tariff landscape that is likely to keep shifting as the Trump administration negotiates with countries.

Oil prices were lower. US crude fell 2.66% to $62.96 a barrel and Brent fell to $66.12 per barrel, down 2.71% on the day.

Reuters