U.S. stock markets and the dollar tumbled dramatically once again as President Donald Trump escalated his attacks on Federal Reserve Chair Jerome Powell, calling him “a major loser” for not implementing more aggressive interest rate cuts. The president, whose administration has been under scrutiny for its handling of the economy, took to social media to amplify his criticism.
In a biting post on Twitter, Trump urged Powell to “pre-emptively” lower interest rates to stimulate the economy. “There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” he wrote, pointing to what he sees as the Fed’s slow pace in reacting to economic developments.
Trump’s latest comments come amid broader economic challenges, including a trade war fueled by his own tariffs, which have caused a sell-off in the stock market and raised concerns over a potential recession. His strained relationship with Powell, whom he appointed to lead the Federal Reserve during his first term, has intensified the uncertainty surrounding the market.
The stock market’s reaction was swift. The S&P 500, which tracks 500 of the largest U.S. companies, dropped approximately 2.4% on Monday, continuing its downward trajectory. Since the beginning of the year, the index has shed around 12% of its value. The Dow Jones Industrial Average also fell by 2.5%, with a total loss of about 10% this year. Similarly, the Nasdaq fell more than 2.5% and is down nearly 18% since January.
Despite the common perception that the U.S. dollar and government bonds are safe havens during market turmoil, both have been affected by the current volatility. The dollar index, which measures the strength of the U.S. dollar against a basket of currencies including the euro, dropped to its lowest level since 2022. Meanwhile, U.S. government bond yields rose as investors demanded higher returns to hold Treasuries.
In the Asia-Pacific region, stock market activity was relatively subdued on Tuesday afternoon. The Nikkei 225 in Japan and the ASX 200 in Sydney saw slight declines of around 0.1%, while Hong Kong’s Hang Seng index increased by 0.2%.
Gold prices surged to a new record high, crossing the $3,400 per ounce mark for the first time. The precious metal is considered a “safe-haven” asset, often sought after in times of economic uncertainty.
Trump’s attacks on Powell are not new. The president has long criticized the Fed chair’s decisions, including his refusal to aggressively lower borrowing costs. Last week, Trump publicly called for Powell to be fired, writing on social media: “Powell’s termination cannot come fast enough.” While such a move would be controversial and legally dubious, with Powell’s term protected by the Federal Reserve’s tradition of independence, the president’s statements have nonetheless fueled political and market volatility.
Powell himself has responded, asserting that he does not believe Trump has the legal authority to remove him from his post. Nevertheless, a senior economic adviser to Trump confirmed that the administration had been exploring the possibility of removing Powell, despite the legal and political ramifications.
The standoff between the president and the Fed chair continues to play out in the public eye, influencing both market performance and public perception of the administration’s economic strategies.