By Caroline Valetkevitch
NEW YORK (Reuters) – Major U.S. stock indexes dropped and the dollar index slid to a three-year low on Monday as U.S. President Donald Trump’s continued attacks on the Federal Reserve chair and the bank’s monetary policy rattled investors.
Investors flocked to safe-haven assets including gold, which hit another record high, and the Swiss franc.
Trump on Monday repeated his criticism of Fed Chair Jerome Powell and said the U.S. economy could slow down unless interest rates were lowered immediately.
White House economic adviser Kevin Hassett said on Friday, when many markets were closed, that Trump and his team would study the matter, when asked if firing Powell was an option. Trump had launched a scathing attack against Powell on Thursday.
His comments about Powell fueled worries about the Fed’s independence in setting a monetary policy path and about the outlook for U.S. assets. Most markets were closed on Friday and some, including most of Europe, remained on holiday for Easter Monday, leading to thinner-than-usual liquidity.
Powell is “a steady hand, he’s a known entity, he’s stability in a world of uncertainty. He brings that calmness to the market, something people can rely on that hasn’t changed stability while all this chaos is going on,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
Trump’s tariffs have roiled financial markets in recent weeks and remain a big concern for investors.
The Sino-U.S. trade rift deepened after Beijing warned other countries against striking deals with the United States at China’s expense, adding fuel to the spiraling trade war between the world’s two largest economies.
The Dow Jones Industrial Average fell 971.82 points, or 2.48%, to 38,170.41, the S&P 500 fell 124.50 points, or 2.36%, to 5,158.20 and the Nasdaq Composite fell 415.55 points, or 2.55%, to 15,870.90.
The S&P 500 closed 16% below its February 19 record closing high. If the bellwether index closes 20% below that all-time high, that will confirm the index has entered a bear market.
MSCI’s gauge of stocks across the globe fell 10.31 points, or 1.30%, to 783.11.
The Fed, after a series of rate cuts late last year, has left its benchmark policy rate on hold in the range of 4.25% to 4.50% since December.
Chicago Fed President Austan Goolsbee said on Sunday that he hopes the United States is not moving to an environment where the ability of the central bank to set monetary policy independent of political pressure is questioned.
“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, and they see more uncertainty, not less uncertainty,” said Adam Sarhan, chief executive at 50 Park Investments in New York.
“We’re seeing more weakness now in the dollar and gold is at all-time highs, so clearly investors are spooked and fear is taking over.”
Spot gold rose 2.7% to $3,417.62 an ounce. Prices hit a record high of $3,430.18 earlier in the session.
Against a basket of currencies, the dollar slid as low as 97.923, its lowest since March 2022. The currency also fell to a decade-low against the Swiss franc, while the euro broke above $1.15.
The euro was last up 0.99% at $1.1504. Against the Japanese yen, the dollar weakened 0.87% to 140.93. Against the Swiss franc, the dollar weakened 0.88% to 0.809.
Longer-dated U.S. Treasury yields rose as investors assessed the Trump administration’s escalating attacks on the Fed chair. The yield on benchmark U.S. 10-year notes rose 8.8 basis points to 4.415%, from 4.327% late on Thursday.
First-quarter results from U.S. companies continue to roll in, with reports from top names like Google’s parent Alphabet due this week.
Companies and investors are grappling with a tariff landscape that is likely to keep shifting as the Trump administration negotiates with countries.
Oil prices fell more than 2% on signs of progress in talks between the U.S. and Iran. Investors are still concerned about the impact of Trump’s tariffs on demand for fuel.
Brent crude futures were down $1.70, or 2.5%, at $66.26 a barrel, while U.S. West Texas Intermediate crude fell $1.60, or 2.5%, to $63.08 a barrel.
(Additional reporting by Stephen Culp in New York and Ankur Banerjee; Editing by Philippa Fletcher, Sandra Maler and Jamie Freed)
