US stocks and dollar sink as Donald Trump renews attacks on Fed chair Jay Powell

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Wall Street stocks and the dollar tumbled amid mounting uncertainty over the US economy as President Donald Trump renewed his attacks on Federal Reserve chair Jay Powell.

In a post on his Truth Social platform on Monday morning shortly after the markets opened, Trump said Powell, whom he called “Mr Too Late”, should lower interest rates “NOW” to stimulate the economy.

US equities opened lower but the sell-off intensified after Trump’s social media post taking aim at the central banker. The S&P 500 ended the session 2.4 per cent lower, with more than nine in 10 of its constituent stocks in negative territory. The tech-heavy Nasdaq Composite dropped 2.6 per cent.

The market moves came after Kevin Hassett, director of the National Economic Council, said on Friday that Trump would “continue to study” the matter of dismissing Powell after the president claimed the previous day that he had the right to fire the Fed chair.

The president has repeatedly criticised Powell for not lowering interest rates sufficiently swiftly, while the Fed chair has said he would never be influenced by political pressure.

“If you think that it’s unacceptable for President Trump to be frustrated with the policy history of the Fed, then I think you . . . got some explaining to do,” Hassett told reporters in Washington on Friday, when US markets were closed.

The dollar fell as much as 1.5 per cent to a three-year low against a basket of its big trading partners on Monday, while the euro gained 1.1 per cent to $1.154 and the yen was 0.9 per cent firmer at ¥140.84 per dollar.

US sovereign debt sold off. The yield on the 10-year US Treasury was up 0.08 percentage points at 4.41 per cent after Trump’s latest social media post. Bond yields move inversely to prices.

“The idea that Powell could be on the way out will definitely put real fear into the market. He’s a voice of sanity, a known quantity,” said Steven Grey, chief investment officer at Grey Value Management.

Monday’s flight from dollar-denominated assets also reflected broader concerns about increasingly volatile US policymaking, Grey said. “Trump is unreliable, he cannot be trusted. What many foreigners are inferring from Trump’s getting elected twice is that America itself cannot be trusted or relied upon to the extent that it has been for many decades.”

Yujiro Goto, forex strategist at Nomura Securities, said the combination of bond sell-offs and currency depreciation at the same time was rare in a major reserve currency market such as the US.

Goto attributed the rise in the yen to concerns over US “stagflation” and “growing distrust in US asset credibility”.

Analysts at CICC, the Chinese investment bank, said in a report on Sunday that domestic US policy uncertainty was leading the dollar and Treasuries to “behave more like risk assets”.

They added that Trump’s recent remarks about Powell “further heightened market concerns about the Federal Reserve’s independence”.

Michael Feroli, chief US economist at JPMorgan, said in an investor note: “Any reduction in the independence of the Fed would add upside risks to an inflation outlook that is already subject to upward pressures from tariffs and somewhat elevated inflation expectations.”

The central bank has so far kept rates on hold this year after lowering them three times in 2024. Its next meeting is in May.

The Fed sets monetary policy independently of the other branches of government. Any attempt to oust Powell, whose term is scheduled to end in May 2026, or pressure monetary policy could cause further market turmoil in the US, according to investors and analysts.

Additional reporting by Cheng Leng in Hong Kong