As US markets reopened following the Easter weekend, major indices suffered steep declines. The S&P 500, a benchmark for America’s largest companies, dropped 2.4%, while the tech-heavy Nasdaq 100 fell 2.6%. The Dow Jones Industrial Average also slid 2.5%.
The US dollar, typically viewed as a safe haven during market volatility, slumped 1.1% to a three-year low against a basket of six major currencies. The pound rose 0.8% to $1.34 in response.
Meanwhile, gold surged past $3,400 to a new record high as investors sought refuge in traditional safe-haven assets amid mounting uncertainty.
The market upheaval was triggered by comments from Kevin Hassett, economic adviser to President Trump, suggesting the president was exploring whether he had the legal authority to dismiss Jerome Powell, chairman of the Federal Reserve.
On his Truth Social platform, Mr. Trump renewed his criticism of Powell—who has served as Fed chair since 2018—urging immediate interest rate cuts to avoid an economic slowdown.
“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, now,” Trump posted.
The president’s mounting frustration stems from what he perceives as Powell’s failure to act swiftly on rate reductions. However, analysts warn that such political interference could undermine the Fed’s independence and destabilise financial markets.
Paul Ashworth of Capital Economics cautioned: “Firing Powell would just be the first step in dismantling the Fed’s independence. If Trump is set on lowering interest rates then he will have to fire the other six Fed board members too, which would trigger a more severe market backlash.”
