US stocks ended the day sharply lower Monday and the dollar tumbled as investors assessed continued tariff uncertainty and the implications of President Donald Trump’s ongoing mission to try and oust Federal Reserve Chair Jerome Powell.
The Dow fell 972 points, or 2.48%. The broader S&P 500 fell 2.36%. The tech-heavy Nasdaq Composite slid 2.55%. The three major indexes slumped throughout the day before pulling back slightly in the afternoon.
The sell-off on Monday was widespread, as nearly every company in the Dow and the S&P 500 closed lower. All three major indexes are coming off of a week in the red and are on pace for their worst month since 2022.
The US dollar index, which measures the dollar’s strength against six foreign currencies, slumped more than 1% to its lowest level in more than three years.
Wall Street has been on edge since Trump on Thursday lashed out at Powell and said on social media that his “termination cannot come fast enough!”
Trump lambasted Powell for not cutting interest rates — a complaint he has levied multiple times against the Fed chair. The diatribe came as the European Central Bank cut its benchmark interest rate and after Powell spoke last week of the potential economic consequences of Trump’s tariff agenda.
“If I want him out, he’ll be out of there real fast, believe me,” Trump told reporters in the Oval Office Thursday. “I’m not happy with him.”
Trump on Monday continued his tirade against Powell, calling him a “major loser” in a social media post pressuring the central bank leader to lower interest rates.
Director of the National Economic Council Kevin Hassett on Friday told reporters that the Trump administration “will continue to study” the possibility of removing Powell. Hassett said he wants to look into “new legal analysis” before determining whether Trump can or should terminate Powell — a break from his previous comments stressing the Fed’s independence.
While many experts say the president does not in fact have the power to fire the Fed chief due to policy differences, Trump has made clear he’s willing to break with norms and precedent, even in the face of potentially monumental repercussions.
“I don’t think Wall Street likes the fact that the president is trying to control monetary policy, which would certainly not be a good thing over the [long term],” said Sam Stovall, chief investment strategist at CFRA Research.
Powell on Wednesday said at an event in Chicago said Trump’s tariffs were unlike anything in modern history, with the potential to stoke inflation and drag on economic growth. The stark warning highlights that tariffs could complicate the Fed’s rate-cutting path.
Trump, who appointed Powell during his first term, has long bickered with the Fed chair over interest rates. The Fed’s independence from politics is a hallmark of the central bank, and analysts overwhelmingly expect markets to react negatively to an attempt to fire Powell. Trump’s attack on the Fed’s independence has also raised concerns that investors might lose confidence in the stability of US markets.
“President Trump’s renewed criticism of Fed Chair Powell this week is a reminder that trade policy is not the only channel through which the administration’s unconventional approach could undermine the dollar and US asset markets,” said Jonas Goltermann, senior markets economist at Capital Economics, in a Thursday note.
Dollar under pressure as confidence wavers
When stocks slump, investors usually seek out safe havens like US government bonds and the dollar. Yet investors are selling the dollar while other safe havens, like gold, are soaring. The dollar has broadly weakened this year in a potential sign of waning confidence in the US.
Krishna Guha, vice chairman at Evercore ISI, said in a Friday note that “recent market action shows a loss of confidence in Trump economic policy,” citing higher Treasury yields and a weaker dollar.
Analysts at Macquarie said in a Monday note that “flight from the USD” stems from “concerns over the Fed’s independence” and a lack of trade deal announcements, signaling that negotiations over tariffs might last many months.
“The ‘test case’ of US-Japan negotiations failed to reach a deal on trade and tariffs late last week,” said Thierry Wizman, global FX and rates strategist at Macquarie. “That suggests a period of bilateral negotiations that last into July, and casts doubt about the willingness of the US and its allies to make bilateral concessions easily.”
The market on Monday was reacting negatively to Trump’s pressure on Fed Chair Powell and the lack of a trade deal announcement after the Trump administration met with officials from Japan last week, Stovall said.
The yield on the 10-year Treasury rose above 4.4% on Monday, up from Thursday. US trading was closed Friday in observance of Good Friday.
The Fed’s board of governors is scheduled to meet the first week of May to determine its next decision on its benchmark interest rate. About 88% of traders expect the Fed to hold rates steady, according to the CME FedWatch tool.
“Powell reiterated that the Fed is likely to remain in wait-and-see mode as it assesses the effect of tariffs on the economy,” analysts at Morgan Stanley said in a Monday note.
Gold on Monday surged more than 3% and hit a fresh record high above $3,400 a troy ounce. The yellow metal has been on a tear this year as investors flock to safe havens. Gold is up about 30% this year, outpacing its gain of 27% across 2024.
Wall Street this week will also digest a slate of first-quarter earnings results. Investors will likely be attuned to chief executives’ guidance and forecasts for the year amid heightened tariff uncertainty.
Tesla (TSLA), which slumped 5.75% on Monday, is scheduled to report earnings after the bell on Tuesday. Alphabet (GOOGL), which fell 2.31% on Monday, is expected to report earnings on Thursday.
“Tariffs will remain top of mind over the coming few months, yet investors are likely to refocus their short-term attention on the Q1 2025 earnings reporting period,” said CFRA Research’s Stovall in a Monday note.
