US stock markets and the dollar dropped sharply on Monday after President Donald Trump criticized Federal Reserve Chair Jerome Powell for not cutting interest rates. Trump, in a social media post, called Powell “a major loser” and blamed him for acting too slowly to support the economy. The president urged the central bank to reduce interest rates quickly to prevent an economic slowdown.
This latest clash between Trump and Powell comes as rising tariffs and trade tensions have already shaken investor confidence. Major US indexes recorded heavy losses, while safe-haven assets like gold surged to record highs.
Stock Markets Plunge Amid Economic Fears
On Monday, the S&P 500 fell by about 2.4%, continuing its downward trend. The index has now lost 12% of its value since January. The Dow Jones Industrial Average dropped 2.5%, and is down around 10% this year. Meanwhile, the tech-heavy Nasdaq slid more than 2.5%, bringing its total decline for the year to about 18%.
Investors have been pulling away from stocks due to fears of a possible US recession. The drop followed Trump’s remarks targeting Powell, adding to existing worries sparked by trade tensions and rising inflation.
Dollar and US Bonds Face Pressure
Traditionally, the US dollar and government bonds are seen as safe choices during market volatility. However, even these assets have felt the recent strain. On Monday, the US dollar index — which tracks the dollar against major currencies including the euro — fell to its lowest level since 2022.
At the same time, interest rates on US government debt rose. This happened because investors demanded higher returns for holding Treasuries amid growing uncertainty.
Asian Markets React Cautiously
The impact of the US market downturn was also felt in Asia-Pacific markets. Trading was slow in the region by Tuesday afternoon. Japan’s Nikkei 225 and Australia’s ASX 200 slipped about 0.1% each. Hong Kong’s Hang Seng Index was slightly up, gaining 0.2%.
Investors in Asia remained cautious, watching the ongoing tensions between Trump and Powell, as well as other global market risks.
Gold Hits Record High as Investors Seek Safety
As stock prices dropped, gold prices climbed. On Monday, the price of spot gold crossed $3,400 per ounce for the first time. The precious metal is often viewed as a secure asset during times of economic uncertainty.
The sharp rise in gold prices signals that many investors are moving their money into safer places as market fears grow.
Trump’s Ongoing Criticism of Powell
Trump’s disagreement with Powell is not new. The president first appointed Powell during his initial term but has since been openly critical of him. Trump has repeatedly pushed for lower borrowing costs, arguing that interest rate cuts would support the economy.
Recently, Trump accused Powell of raising risks of an economic slowdown by keeping rates steady. He even called for Powell’s removal, writing on social media: “Powell’s termination cannot come fast enough.”
This demand comes despite questions over whether a US president has the legal authority to dismiss a Fed chair before the end of their term.
Powell Responds to Political Pressure
In past statements, Powell has emphasized the importance of the Federal Reserve’s independence. He noted last year that he does not believe a president can legally remove a Fed chair without cause.
Despite the pressure, Powell has warned that Trump’s tariff policies could increase costs and weaken the US economy. The Fed has carefully managed its decisions amid global trade disputes and market swings.
One of Trump’s senior economic advisers confirmed on Friday that officials were examining the legal options surrounding Powell’s position. This announcement came while US stock markets were closed.
The rising tension between Trump and Powell has added uncertainty to already unstable markets. With US stocks falling, the dollar weakening, and gold prices climbing, investors remain on edge about what might come next.
