Stocks slumped, bonds sold off and the U.S. dollar continued to lose ground on Monday as markets reverberated from President Trump’s trade war and new attacks on the chair of the Federal Reserve.
U.S. stock markets, which reopened Monday after the Good Friday holiday, were lower in early trading. The sell-off gained steam after Mr. Trump again targeted Jerome H. Powell, the Fed chair, in a social media post, calling on him to lower interest rates and shifting blame for any economic slowdown to the central bank. The S&P 500 fell more than 2 percent, while the technology-heavy Nasdaq Composite index was down roughly 2.6 percent.
U.S. government bonds, which have emerged as a major concern for Wall Street and the White House, showed renewed stress, with the 10-year Treasury yield at one point jumping above 4.4 percent. (Yields move inversely to prices.) Gold surged to another record, as investors sought out assets not tied to the U.S. dollar.
In Asia, the Nikkei 225, Japan’s benchmark stock index, fell 1.3 percent and stocks in Taiwan fell 1.5 percent. Many markets, including those in Hong Kong, Australia and much of Europe, remained closed on Monday for Easter holidays.
Oil, which has fallen as much as 24 percent since mid-January, was down more than 2 percent on Monday, with Brent crude at about $66 a barrel. Oil prices are often considered a barometer of future economic growth, and they have been weighed down by the prospect that Mr. Trump’s tariffs will damage international trade.
The U.S. dollar continued its slide against nearly every other major currency. It fell about 1 percent against the euro on Monday, to the lowest in more than three years. The dollar also fell against the Japanese yen, to its lowest level since September. The trend is even more stark against some other currencies: The dollar is the lowest it has been against the Swiss Franc in more than a decade.
Last week, Mr. Trump lashed out at Mr. Powell, the Fed chair, for keeping interest rates too high for the president’s liking. “If I want him out, he’ll be out of there real fast, believe me,” Mr. Trump told reporters on Thursday.
The president is said to be wary of trying to oust Mr. Powell before his term as chair is up next year, which would probably inject even more volatility into already jittery financial markets. The political independence of the Fed is seen as critical across world financial markets, and threats to that independence has made investors anxious about the stability of assets priced in dollars, long considered safe and reliable place to park money.
“We believe dollar weakness will continue,” said Win Thin, a managing director at Brown Brother Harriman, in a note. He added, though, that recent gains in some currencies may not last because economic growth was likely to weaken.
Investors remain on edge over the global economy. Mr. Trump has drastically raised U.S. tariffs on imports, as high as 145 percent on Chinese goods, to flatten U.S. trade imbalances. Beyond tariffs, Washington has tightened trade on critical items such as advanced silicon chips. China has responded with high tariffs on U.S. goods and restrictions on exports of rare earth minerals and magnets, essential for electric car motors and other technologies.
Economists project these changes will raise prices while impeding growth.
“‘News out of Washington’ remains the primary catalyst for markets,” said Chris Larkin, head of trading and investing at E-Trade. “Choppiness will likely continue until trade policy clarifies,” he added.
Trump administration officials have said many U.S. trading partners have sought to make deals to avoid suffocating tariffs, but no agreements have been announced.
This week will also provide updates on how companies are coping with the changes. Tesla will report quarterly earnings on Tuesday, and Alphabet and Intel on Thursday. Their forecasts will be scoured to pinpoint the projected impact of the new trade policies.
The International Monetary Fund has already warned that its latest projections for the global economy, to be released on Tuesday, will forecast slower growth and higher inflation this year than previously anticipated.
“Protracted high uncertainty raises the risk of financial market stress,” Kristalina Georgieva, managing director of the I.M.F., said in a speech on Thursday.
The decline of the dollar may be a reflection of that stress. On the surface, a weaker dollar makes American goods cheaper overseas, and imports more expensive. But a substantial shift could signal that investors are moving away from a decades-long belief that the dollar and U.S. assets were a safe haven, and are instead choosing to put their money elsewhere.
That shift can be seen in the dash for gold, which has surged nearly 30 percent in price this year. Gold set yet another record high on Monday, rising above $3,400 per ounce for the first time.
Danielle Kaye is a business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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