US: S&P 500 ends down 2.4% after Trump slams Fed chief again

[NEW YORK] Wall Street stocks finished sharply lower on Monday (Apr 21) after a fresh attack on Federal Reserve chair Jerome Powell by President Trump sparked another round of selling in US assets.

All three major equity indices finished down by around 2.5 per cent while the US dollar retreated and Treasury bond yields moved higher.

There is a “narrative of weakening demand for US assets”, said Briefing.com analyst Patrick O’Hare.

The Dow Jones Industrial Average dropped 2.5 per cent to 38,170.41.

The broad-based S&P 500 fell 2.4 per cent to 5,158.20, while the tech-rich Nasdaq Composite Index shed 2.6 per cent to 15,870.90.

Stocks had opened lower after China warned other countries against negotiating trade deals with the United States at Beijing’s expense, as Trump’s tariffs continue to rock global markets.

But equities fell further shortly after the market opened when Trump called Powell a “major loser” for not cutting interest rates in a social media post, underscoring questions about whether Trump will attempt to fire Powell after threatening the action last week.

Trump’s continued banter about removing or replacing Powell throws into question the independence of the US central bank in which the Fed is free from political interference as it sets monetary policy based on the imperatives of ensuring stable prices and achieving maximum employment

Investors view this tradition as foundational to American markets.

Jack Ablin, chief investment officer of Cresset Capital Management, said a move to replace Powell with an appointee who would follow Trump’s demands would bring a “crisis of confidence”.

O’Hare said the spike in US Treasury bond yields – along with the dynamics in currency and equity markets – amounted “to a bit of a message from the markets to the president: Don’t fire Powell”.

All 11 sectors of the S&P 500 finished in the red. Of the 30 members of the Dow index, only Nike mustered a modest gain, with the other companies finishing lower. AFP