The Dow-30 sank nearly 1,000 points Monday, while the S&P 500 and Nasdaq Composite both shed 2%+ as U.S. President Donald Trump added fresh uncertainty to markets by ramping up his recent feud with Fed chief Jerome Powell.
The $Nasdaq Composite Index (.IXIC.US)$ led the way lower, sinking 415.55 points (2.6%) to a preliminary 15,870.90 finish, while the $S&P 500 Index (.SPX.US)$ gave up 124.50 ticks (2.4%) to 5,158.20. Meanwhile, the $Dow Jones Industrial Average (.DJI.US)$ shed 971.82 points (2.5%) to 38,170.41.
Stocks fell after Trump expanded his recent criticism of the Federal Reserve and Powell, whom the president has hinted that he wants to fire.
The president called early Monday in a post on his Truth Social platform for "lower interest rates NOW," while calling Powell "Mr. Too Late" and "a major loser."
"'Preemptive Cuts' in Interest Rates are being called for by many," Trump wrote. "With Energy Costs way down, food prices (including Biden's egg disaster!) substantially lower, and most other 'things' trending down, there is virtually No Inflation. 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. Europe has already 'lowered' seven times.โ
Trump began publicly criticizing Powell and the Fed last week for keeping the central bank's benchmark Federal Funds rate unchanged in recent months instead of lowering it.
The Fed has said it's worried about excessive inflation, which has remained above the central bank's 2% target rate.
However, the president has not only criticized that decision, but hinted that he wants to get rid of Powell -- although it's unclear whether Trump has the power under U.S. laws to do so.
The Fed is supposed to operate independent of political pressure in its efforts to maximize U.S. employment while minimizing inflation.
Exposing the central bank to political pressure could presumably lead to a Fed that keeps rates low much of the time, as easy money often gooses up the economy and stock market temporarily.
However, keeping rates too low for too long can risk creating excessive inflation. That would likely lead to higher consumer prices, a weaker dollar, heftier levels for gold and higher long-term interest rates.
Trump's criticism of Powell seemed to push markets precisely in that direction Monday. The $USD (USDindex.FX)$ fell, $Gold (LIST2110.US)$ and $Gold Futures(JUN5) (GCmain.US)$ both hit a new record high and $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ rose.
The burgeoning Trump/Powell feud created fresh uncertainty on Wall Street at a time when the global trade-and-tariff war remains unresolved.
In the latest trade news, China said Monday that it "firmly opposes" reported efforts by Washington to use tariff talks with third-party nations to pressure them into reducing trade ties with Beijing.
CNN quoted a Chinese Commerce Ministry spokesperson as saying that Beijing would "resolutely take reciprocal countermeasures" to such efforts.
MOOVERS
Monday's market sell-off saw many prominent stocks lose ground. Percentage decliners included:
-- $USA Rare Earth (USAR.US)$, which fell 16.7%. The American rare-earth-metals company has been mostly rising but swinging volatilely in recent weeks after China banned rare-earth sales to America.
-- $Tesla (TSLA.US)$, which shed 5.8% ahead of the EV maker's upcoming Q1 earnings report due Tuesday evening.
-- $NVIDIA (NVDA.US)$, down 4.5%. The stock has been falling since last week, when Washington imposed a new permitting requirement to sell advanced chips like NVDA's H20 series to China. Wall Street thinks the move will curtail Nvidia's ability to fulfill existing Chinese orders for the chips.
Meanwhile, Monday's major percentage gainers included:
-- $Kohl's Corp (KSS.US)$, up 8.3%. The retailer has been generally falling in recent weeks on fears that tariffs will force it to raise prices. However, KSS bounced higher Monday after hitting a neat-term low last week
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