[New York Stock Exchange] Markets Plunge Amid Trump’s “Powell Undermining”... Accelerated ‘Sell America’ in Stocks, Dollar, and Treasuries

Trump Pressures Powell to "Cut Rates Immediately" Again
U.S. Treasuries and Dollar, Both Safe-Haven Assets, Decline Together
Trade Negotiations Show Little Progress

All three major indexes on the New York Stock Exchange closed lower on April 21 (local time). Investor sentiment was dampened as President Donald Trump ramped up pressure on Federal Reserve (Fed) Chair Jerome Powell to immediately cut interest rates, intensifying his attacks day after day. Uncertainty over tariff policies, combined with concerns about the independence of monetary policy, accelerated the 'Sell America' trend, with declines not only in risk assets like stocks but also in safe-haven assets such as U.S. Treasury bonds and the dollar.

Reuters Yonhap News

On this day, the blue-chip Dow Jones Industrial Average (Dow) closed at 38,170.41, down 971.82 points (2.48%) from the previous session. The large-cap S&P 500 index fell 124.5 points (2.36%) to 5,158.2, while the tech-heavy Nasdaq index plunged 415.55 points (2.55%) to finish at 15,870.9.

By sector, technology stocks saw significant declines. U.S. electric vehicle maker Tesla fell 5.96%, and Nvidia dropped 4.51%. Meta, the parent company of Facebook, slipped 3.35%. Alphabet, Google's parent company, and Microsoft (MS) declined by 2.28% and 2.35%, respectively. Heavy equipment manufacturer Caterpillar was down 2.77%.

President Trump further heightened concerns over the independence of monetary policy by once again pressuring Chair Powell. On his self-created social networking service, Truth Social, Trump wrote, "In reality, there is no inflation happening," and warned, "If Mr. Too Late, the major loser, does not cut rates immediately, the economy could slow down." Just four days earlier, on April 17, Trump had demanded a rate cut and mentioned the possibility of firing Powell, saying, "If I wanted him out, he would be gone very quickly." The Trump administration has stated that it is considering dismissing Powell. Kevin Hassett, Chairman of the White House National Economic Council (NEC), said on April 18, "President Trump and his team will continue to review the matter."

As President Trump continued his campaign to undermine Powell, the market's losses deepened. Concerns that the Fed might be unable to respond appropriately to macroeconomic variables such as inflation due to Trump's pressure led to a sell-off. With stagflation fears (rising prices amid economic slowdown) emerging due to tariff shocks, the Fed now faces a dilemma regarding the future path of monetary policy. Some analysts suggest that Trump's repeated pressure on Powell is aimed at forcing a rate cut to prevent a tariff-induced recession, while also positioning Powell as the scapegoat should a recession become reality.

Fears over the erosion of monetary policy independence have prompted investors to pull out not only from stocks but also from safe-haven assets like the U.S. dollar and Treasuries. The dollar index, which measures the dollar's value against six major currencies, dropped 1.01% from the previous session to 98.13, marking its lowest level in three years.

U.S. Treasury yields are rising, particularly for longer maturities. The 30-year Treasury yield jumped 11 basis points (1bp = 0.01 percentage point) from the previous session to 4.92%. The 10-year Treasury yield, seen as a global bond benchmark, rose 8 basis points to 4.4%. The yield on the 2-year Treasury, a short-term instrument, fell 3 basis points to 3.76%. Treasury yields move inversely to prices. The rise in long-term yields indicates that investors are selling longer-dated Treasuries, which can be interpreted as a sign of shaken confidence in the U.S. economy's medium- to long-term outlook.

Meanwhile, demand for gold, a safe-haven asset, has surged, pushing gold futures above $3,400 per ounce to an all-time high.

There are no clear signs of progress in trade negotiations between the U.S. and other countries, making it difficult to find catalysts for a rebound. China has warned that it will retaliate against countries that negotiate tariff exemptions with the U.S. at the expense of China.

Thierry Wizman, global FX and rates strategist at Macquarie, said, "The outflow from the dollar is due to growing concerns over the Fed's independence and the lack of progress in Washington's trade negotiations." He added, "As concerns over the Fed's independence weaken confidence in the U.S. commitment to controlling consumer price inflation, funds are moving into gold and long-term Treasury yields are surging."

Michael Brown, senior research strategist at Pepperstone, said, "If Chair Powell is dismissed, the initial response will be massive volatility in financial markets," predicting "the most dramatic rush out of U.S. assets imaginable." He added, "Not only is the Fed's independence clearly under threat, but a weaker dollar and the potential erosion of U.S. hegemony are also becoming increasingly real."