Markets slide as Trump Fed criticism and trade fears rattle investors

[UNITED STATES] U.S. stock markets fell sharply on Monday, and the dollar index slid to its lowest level in three years, as President Donald Trump’s renewed criticism of the Federal Reserve and its chair, Jerome Powell, unsettled investors already on edge.

Seeking safety, investors moved into traditional haven assets such as gold—which surged to a fresh record—and the Swiss franc. Trump on Monday reiterated his disapproval of Powell’s leadership and warned that the U.S. economy could decelerate unless interest rates were cut immediately.

White House economic adviser Kevin Hassett said on Friday that the administration would consider its options when asked whether Trump might attempt to dismiss Powell. The comment, made while many markets were closed, followed a harsh verbal attack by Trump on the Fed chair the previous day.

The ongoing friction between the White House and the Federal Reserve has intensified concerns about potential political interference in central bank policymaking. The Fed’s independence has long been viewed as crucial to its credibility, ensuring monetary decisions are based on economic data rather than political agendas. The current dynamic has introduced a new layer of uncertainty, as investors worry that political pressure could steer policy in a detrimental direction.

Trump’s remarks amplified fears about the erosion of the Fed’s autonomy and its implications for the future of U.S. economic policy. With trading volume subdued due to holiday closures across several global markets, including most of Europe for Easter Monday, market movements were more pronounced.

Beyond concerns over the Fed, broader economic indicators are also weighing on sentiment. Recent data points to a deceleration in the U.S. economy, with manufacturing activity softening and consumer confidence slipping. Although the labor market remains relatively robust, persistent trade tensions and geopolitical uncertainty are fueling apprehension about further economic weakening.

“Powell represents a steady hand—he’s known, he’s predictable, and he brings a sense of calm to markets amid all the chaos,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

The market’s response to recent developments underscores the importance of stability and transparency in monetary policy. Investors are particularly sensitive to anything that may jeopardize the Fed’s credibility, as it plays a central role in managing inflation and sustaining economic growth. The latest turmoil has sent asset prices swinging as capital flows into safe-haven investments.

Meanwhile, Trump’s tariff policies continue to weigh heavily on financial markets. The U.S.-China trade conflict deepened after Beijing cautioned other nations against aligning with Washington at China’s expense, escalating tensions between the world’s two largest economies.

Major U.S. indexes recorded steep losses:

• The Dow Jones Industrial Average plunged 971.82 points, or 2.48%, to close at 38,170.41.
• The S&P 500 dropped 124.50 points, or 2.36%, ending at 5,158.20.
• The Nasdaq Composite shed 415.55 points, or 2.55%, to finish at 15,870.90.

The S&P 500 now sits 16% below its record closing high from February 19. A further decline to 20% would mark the entry into bear market territory.

Globally, equities also weakened. MSCI’s all-country world index declined 10.31 points, or 1.30%, to 783.11.

Following multiple rate cuts last year, the Fed has held its key interest rate steady in the 4.25%–4.50% range since December. On Sunday, Chicago Fed President Austan Goolsbee expressed concern over the potential erosion of the central bank’s independence, cautioning against a shift toward politically influenced monetary policy.

“The fact that markets are down so significantly after a long weekend indicates investors are returning to heightened uncertainty, not clarity,” said Adam Sarhan, CEO of 50 Park Investments in New York. “With the dollar weakening and gold hitting all-time highs, fear clearly dominates the market.”

Spot gold rose 2.7% to $3,417.62 per ounce, after earlier hitting an all-time peak of $3,430.18.

The dollar index, which tracks the greenback against a basket of major currencies, dropped to 97.923—its weakest level since March 2022. The dollar also touched a decade-low against the Swiss franc and fell against the euro, which rose 0.99% to $1.1504. Against the Japanese yen, the dollar declined 0.87% to 140.93, and against the Swiss franc, it dropped 0.88% to 0.809.

In the bond market, longer-term Treasury yields rose as investors evaluated the potential fallout from the administration’s criticisms of the Fed. The yield on the benchmark 10-year note climbed 8.8 basis points to 4.415%.

Meanwhile, first-quarter corporate earnings reports continue to roll in, with major players like Alphabet, Google’s parent company, set to report later this week.

Adding to investor concerns, oil prices retreated more than 2% amid signs of progress in negotiations between the U.S. and Iran. Market participants remain wary of how Trump’s tariffs might affect global demand for crude.

Brent crude futures declined $1.70, or 2.5%, to $66.26 a barrel, while U.S. West Texas Intermediate fell $1.60, or 2.5%, to $63.08.