US stocks and the dollar experienced a significant downturn after President Donald Trump intensified his criticism of Federal Reserve Chairman Jerome Powell. In a social media post, Trump called Powell a “major loser” for his refusal to lower interest rates. The president’s remarks come as recession fears grow and the US economy shows signs of slowing. Trump is urging Powell to reduce rates “pre-emptively” to boost the economy, a move he believes is essential to avoiding further economic decline.
Market Response to the Ongoing Tensions
President Trump’s growing frustration with Jerome Powell has added fuel to an already volatile market. Appointed by Trump during his first term, Powell has increasingly become the target of the president’s ire. Trump’s trade tariffs, designed to target foreign competitors, have already caused instability in global markets, contributing to a major stock market decline this year.
On Monday, the S&P 500 index dropped by 2.4%, marking a year-to-date loss of around 12%. The Dow Jones Industrial Average followed suit, falling by 2.5% and reflecting a 10% drop for the year. The Nasdaq index, which tracks technology stocks, declined more than 2.5%, extending its loss to nearly 18% in 2025.
Despite being seen as a safe haven during times of economic uncertainty, the US dollar and government bonds also suffered significant losses. The dollar index, which tracks the US currency against others like the Euro, hit its lowest point since 2022. At the same time, yields on government bonds increased as investors demanded higher returns due to the rising risks associated with holding US Treasuries.
Global Markets Remain Cautious While Gold Prices Surge
Across the Asia-Pacific region, market activity remained subdued on Tuesday. Japan’s Nikkei 225 and Australia’s ASX 200 saw modest declines of about 0.1%, reflecting investor caution. Hong Kong’s Hang Seng index showed a slight uptick of 0.2%, signaling a bit of optimism in the region.
Gold prices, however, soared to record levels, as investors flocked to secure assets in light of the growing financial uncertainty. On Monday, spot gold prices surpassed $3,400 per ounce for the first time in history. Typically seen as a safe investment in times of financial instability, gold has been a go-to asset for investors seeking refuge from the current economic turmoil.
White House Eyes Potentially Unprecedented Actions
The tensions between President Trump and Jerome Powell have escalated over the past months. Trump, who appointed Powell as Federal Reserve chair, has voiced his dissatisfaction with the Fed’s policies, particularly its decision not to cut interest rates. In the wake of the financial market turmoil, Trump has made public calls for Powell’s removal. Just last week, he reiterated his stance on social media, stating that Powell’s dismissal could not come soon enough.
The prospect of dismissing Powell, however, is fraught with complications. Such an action would break with a longstanding tradition of independence for the Federal Reserve, a cornerstone of US monetary policy. Powell has repeatedly stated that he does not believe the president has the legal authority to remove him from office. Despite this, sources close to the White House have confirmed that officials are actively considering the possibility of dismissing the Fed chair, although no official decision has been made.
Reports indicate that Trump has expressed frustration with Powell’s handling of the economy, especially in relation to the central bank’s reluctance to lower interest rates sooner. These developments have raised concerns about the stability of the Federal Reserve’s independence and its ability to make decisions without political interference.
As President Trump intensifies his attacks on Federal Reserve Chairman Jerome Powell, financial markets remain on edge. The ongoing conflict between the White House and the Fed, coupled with the impact of trade tariffs and economic uncertainty, continues to create turbulence in both US and global markets. Investors are increasingly turning to gold as a safe haven, while concerns grow about the potential implications for the Federal Reserve’s independence.