Wall Street’s major indices each fell over 1% following US President Donald Trump’s criticisms of Federal Reserve Chair Jerome Powell, which escalated concerns regarding the central bank’s independence and unsettled investors facing a growing trade conflict.
On Friday, White House economic adviser Kevin Hassett stated that Mr. Trump and his team were considering whether dismissing Mr. Powell was a viable option.
This statement came a day after the president remarked that Mr. Powell’s “termination cannot come fast enough”.
These persistent attacks on Mr. Powell heightened fears about the Federal Reserve’s ability to independently govern its monetary policy path in the world’s largest economy, further eroding investor confidence in US assets that had already been weakened by Mr. Trump’s extensive trade tariffs.
“Powell appears to be the only individual capable of countering – and potentially defeating – Trump, yet the markets may still experience collateral damage,” she noted.
A case currently before the Supreme Court is being monitored closely, as it could set a precedent regarding Mr. Trump’s authority to remove Mr. Powell.
The ongoing uncertainty surrounding trade and monetary policy has severely impacted stocks this year.
As of 09:34am ET (2:30pm Irish time), the Dow Jones Industrial Average declined by 449.67 points, or 1.15%, settling at 38,692.56; the S&P 500 dropped 63.52 points, or 1.20%, to 5,219.18; and the Nasdaq Composite slid 226.68 points, or 1.39%, to 16,059.77.
Energy stocks suffered the most, falling by 2.3%, while decreases in mega-cap and growth stocks impacted the information technology and consumer discretionary sectors.
Tesla’s shares fell by 5.2% after a Reuters report indicated that the launch of the EV manufacturer’s more affordable Model Y car had been postponed.
Nvidia saw a decline of 3.9% following a Reuters report that Huawei Technologies intended to start mass shipments of an advanced AI chip to customers in China as soon as next month.
The small-cap Russell 2000 dropped by 1.2%.
Tariff uncertainty lingered.
Investor concerns over tariffs persisted after China’s warning against making agreements with the US that would compromise Beijing’s interests.
Federal Reserve policymakers have also indicated an unclear interest rate outlook due to the uncertainty surrounding tariffs.
Data from LSEG shows traders are now anticipating around 90 basis points of easing from the Fed within this year.
This uncertainty about trade and monetary policy has significantly impacted stocks this year, with the S&P 500 down more than 15% from its record high in February.
This week, company earnings will be closely watched for insights into how firms are navigating this uncertainty, as Tesla and Alphabet commence earnings reports for the major ‘Magnificent Seven’ mega-cap stocks.
Netflix shares increased by 2.6% after the streaming giant offered an optimistic revenue forecast despite potential economic challenges.
Capital One Financial rose by 2.2% after US banking regulators announced on Friday that they had approved its $35.3 billion acquisition of Discover Financial Services, which increased by 4.3%.
Gold mining stocks gained as they followed the rise in prices of the safe-haven precious metal, with Newmont rising by 2.4%.
On the NYSE, declining stocks outnumbered advancers by a 4.28-to-1 ratio, while on the Nasdaq, they outnumbered by a 2.65-to-1 ratio.
The S&P 500 noted one new 52-week high and no new lows, while the Nasdaq Composite recorded 10 new highs and 47 new lows.
