Wall Street stocks and the dollar experienced a important downturn in morning trading on Monday, fueled by escalating uncertainty surrounding the U.S. economy. This turbulence coincided with President Donald Trump’s renewed attacks on federal Reserve Chair Jay Powell.

Market Overview

• U.S. equities opened lower, with the sell-off intensifying as Trump targeted the central banker.
• The S&P 500 declined by 2.5% in late-morning trading, with 97% of its components showing losses.
• The tech-heavy nasdaq Composite fell by 2.9%.

Trump’s Social Media Barrage

President Trump took to his Truth Social platform on Monday morning to voice his discontent. He referred to Powell as Mr Too Late and insisted that interest rates should be lowered NOW to stimulate the economy.

White House Stance

The market’s reaction followed comments made by Kevin Hassett, director of the National Economic council, who stated on Friday that Trump would continue to study the possibility of dismissing Powell. This came after Trump claimed the previous day that he believed he had the authority to fire the Fed chair.

Conflicting Views

Trump has consistently criticized Powell for what he perceives as a slow pace in lowering interest rates. In response, Powell has maintained that he will remain impervious to political pressure.

If you think that it’s unacceptable for President Trump to be frustrated with the policy history of the Fed, then I think you … got some explaining to do.

Kevin Hassett, Director of the National Economic Council

Currency and Debt Market Reactions

• The dollar plummeted by as much as 1.5% to a three-year low against a basket of its key trading partners.
• The euro gained 0.9% to reach $1.15.
• The yen strengthened by 0.9% against the dollar.
• Yields on 10-year U.S. Treasuries rose by 0.04 percentage points to 4.36% following Trump’s social media activity.

Bond yields typically move inversely to prices, reflecting investor sentiment and economic expectations.

Expert Analysis

Thierry Wizman, global foreign exchange and interest rate strategist at Macquarie, attributed the flight from the dollar to growing concerns about the Fed’s independence and the lack of progress on trade deals in Washington.

Wizman also noted the worsening growth outlook reflected in the stock market decline, adding that the willingness to rein in US consumer price inflation is ebbing, hence the flight to gold [and] the backup in long-term [Treasury] yields.

Yujiro Goto, forex strategist at nomura Securities, highlighted the unusual combination of bond sell-offs and currency depreciation in a major reserve currency market like the U.S.

Goto linked the rise in the yen to concerns over U.S. stagflation and growing distrust in US asset credibility.

CICC’s Viewpoint

Analysts at CICC, a Chinese investment bank, suggested in a report that domestic U.S. policy uncertainty was causing the dollar and Treasuries to behave more like risk assets. They added that Trump’s remarks about Powell further heightened market concerns about the Federal Reserve’s independence.

Looking Ahead

The Federal Reserve has maintained steady interest rates this year after implementing three cuts in 2024. The next meeting is scheduled for May. Analysts and investors suggest that any attempts to undermine Powell’s position, whose term is set to end in May 2026, or to exert pressure on monetary policy, could trigger further market instability in the U.S.