(Reuters) -Wall Street’s main indexes each slid to more than one-week lows on Monday after U.S. President Donald Trump doubled down on attacks against Federal Reserve Chair Jerome Powell, amplifying concerns about the central bank’s autonomy and rattling markets.
Trump repeated his criticism of Powell, saying in a Truth Social post that the economy could slow down unless interest rates are lowered immediately. That followed comments by White House economic adviser Kevin Hassett on Friday that Trump and his team would study if firing Powell was an option.
Trump’s continued criticism of the Fed chair has heightened worries about the central bank’s ability to independently formulate monetary policy in the world’s largest economy, undermining investor confidence in U.S. assets already diminished by Trump’s tariffs.
MARKETS:
The S&P 500 was down 3.35% Monday afternoon, in trading somewhat thinned by the absence of numerous overseas markets that remained closed for Easter. The Nasdaq Composite was down 3.63% and the Dow Jones Industrial index was down 3.26%. The U.S. dollar index was down 0.47% and selling of the 10-year Treasury note pushed its yield up 7.4 basis points to 4.4008%.
COMMENTS:
DUSTIN REID, CHIEF STRATEGIST, FIXED INCOME, MACKENZIE INVESTMENTS, TORONTO
“The market is feeling extremely fragile right now, with the uncertainty surrounding tariffs as a backdrop. So that’s why you can see the market selling off on news about Fed independence and Powell – and not just the stock market, but across assets, in the bond and the foreign exchange markets as well. Broadly, global investors are moving away from being overweight US assets. We’re definitely looking at making more structural changes to our portfolio than we normally would on these developments, but so far we haven’t done anything more than increase our risk hedges over the last weeks or months.”
ADAM SARHAN, CHIEF EXECUTIVE, 50 PARK INVESTMENTS, NEW YORK
“The latest headline du jour is Trump is unhappy with Powell’s performance, and it is creating more uncertainty… in a weak environment.
“If this is a strong bull market and we’re going up every single day, it’s a different environment.
“If you step back and look at the market, you’ve been in a downtrend since the end of February. So, you had a big move down, and then over the last 2-1/2 (to) three weeks you moved sideways… The inability to rally illustrates how weak the market is right now. The fact that we’re down so much today after a long weekend tells me, ok, investors went into the weekend, they looked at the situation, ad they see more uncertainty, not less uncertainty.
“Clearly investors are spooked, and fear is taking over.”
ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP, CHICAGO
“It’s really two major stories pushing the market lower. One is the lack of any trade deals over the weekend. I think that we all go home at night hoping that we wake up in the morning with some announcement of some relief on these tariffs and the trade deals as there are all these negotiations with various important nations. And every day that there are no deals struck to provide any relief, it creates continued anxiety that there aren’t going to be any reasonable deals struck and that these policies as currently stated end up being what we have, which is going to be … destructive for the economy.”
“The second issue is Trump’s vocal desires that he is expressing to replace Jerome Powell because he won’t lower interest rates, combined with Jerome Powell’s (comments) last week that they are in no hurry to lower interest rates while they’re waiting to see what sort of inflationary impact the tariffs have. So there’s this terrible stalemate there and concern that there will be some sort of action taken to replace Powell, which would create a real panic in the dollar.”
JACK ABLIN, CHIEF INVESTMENT OFFICER, CRESSET CAPITAL, CHICAGO
“The only new news today that could have triggered this kind of selloff is the fact that investors are worried about Fed independence. If the president puts his own person in, and lowers rates against a backdrop of rising inflation – we’d see a continuation of what we’re experiencing now. Unfortunately, both stocks and the dollar are overvalued, which gives them room to fall more in this environment. The S&P 500, based on my calculations, is still 10 to 15% overdone, above fair market value.”
JAMIE COX MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND VIRGINIA
“Markets are showing disapproval of a lack of progress on trade negotiations. In the absence of any firm commitments from any countries, markets take the fire first, ask questions later (approach.)“
(Compiled by the Global Finance & Markets Breaking News team)
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