Trade Tensions Sink U.S. Markets and Dollar’s Value/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stock markets and the dollar fell sharply Monday as global investors retreated from American assets. Concerns over President Trump’s trade war rhetoric and criticism of the Federal Reserve rattled markets. Big Tech declines, bond market volatility, and weakening investor confidence fueled a broad selloff.
U.S. Markets Slide Amid Trade Fears and Fed Criticism – Quick Looks
- Stock Selloff: S&P 500, Dow, Nasdaq all drop sharply.
- Dollar Weakens: U.S. currency falls against euro, yen, and franc.
- Bond Volatility: Treasurys decline, raising fears over U.S. market stability.
- Trade Tensions: Trump escalates tariff rhetoric, warns U.S. businesses.
- Fed Concerns: Trump pressures Powell to cut interest rates.
- Recession Risk: Investors fear tariffs could push U.S. into downturn.
- Tech Stocks Hit: Tesla falls 4.4% ahead of earnings reports.
- China Pushback: Beijing threatens countermeasures over trade deals.
- Mergers Approved: Discover and Capital One rise on merger approval.
- Global Impact: Tokyo stocks fall while Seoul, Shanghai see gains.
Deep Look: U.S. Stocks, Bonds, and Dollar Fall as Global Investors Pull Back
NEW YORK — U.S. financial markets took a sharp turn lower Monday morning, with stocks, bonds, and the dollar all falling as investor confidence in the U.S. economy showed signs of deep strain. Concerns over President Donald Trump’s ongoing trade war rhetoric and open criticism of the Federal Reserve triggered widespread market retreat.
The S&P 500 index dropped by 1.2% in early trading, extending a larger downturn that has left it 15% below its record high from just two months ago. The Dow Jones Industrial Average fell by 430 points (1.1%), while the Nasdaq composite dropped 1.5%, led by weakness in technology stocks.
More troubling to economists was the simultaneous drop in the value of the U.S. dollar and Treasury bonds, assets traditionally seen as safe havens during periods of economic turbulence. The broad retreat reflects a growing unease over Washington’s economic direction and the long-term perception of the United States as a stable investment hub.
Trade War Escalation Fuels Market Tension
President Trump renewed his combative tone on global trade over the weekend, warning that nations negotiating with the U.S. should avoid doing so “at the expense of China’s interests.” His statement followed China’s announcement that it would impose reciprocal countermeasures against any trade deals seen as undermining its position.
China’s Commerce Ministry delivered a sharp message Monday, warning that Beijing would “resolutely take countermeasures” if other nations made agreements with the U.S. seen as threatening Chinese trade interests.
On social media, Trump doubled down with posts on his Truth Social platform declaring in all caps, “He who has the gold makes the rules,” and disparaging business leaders who oppose tariffs.
Federal Reserve in the Crosshairs
Investor anxiety was further inflamed by Trump’s ongoing criticism of Federal Reserve Chairman Jerome Powell. The president chastised Powell last week for not cutting interest rates more aggressively to stimulate the economy.
Though inflation has cooled to near the Fed’s 2% target after peaking above 9% three years ago, the central bank remains cautious about further rate cuts. Firing Powell, an option that Trump has reportedly considered, would likely send a shockwave through global markets and raise serious concerns about central bank independence.
“A politically compromised Fed is one of the fastest ways to spook markets,” said one analyst. “Even if rate cuts are appealing short-term, weakening the Fed’s credibility could do long-term damage.”
Market Movers: Winners and Losers
On Wall Street, Tesla stock fell 4.4% ahead of its upcoming earnings release. The electric vehicle maker has lost roughly half its market value since its December peak, with critics pointing to overvaluation concerns and CEO Elon Musk’s increasing entanglement in politics and budget debates.
Meanwhile, Discover Financial Services and Capital One Financial surged after regulators approved their proposed merger. Discover jumped 4.6%, and Capital One climbed 2.6%, bucking the day’s downward trend.
Bond Market Signals Investor Caution
The bond market offered mixed signals as traders tried to gauge whether the Fed might still cut rates later this year to support the economy. Short-term Treasury yields fell, while longer-term yields rose.
The yield on the 10-year Treasury note increased to 4.38% from 4.34% on Friday and up from around 4% earlier in April—an unusually large move that signals growing uncertainty over the U.S.’s future economic standing.
Dollar Declines Alongside Stocks and Bonds
In currency markets, the U.S. dollar weakened against major peers, including the euro, Japanese yen, and Swiss franc. The concurrent fall in stocks, bonds, and the dollar represents a rare alignment that suggests a deeper crisis of confidence in U.S. economic leadership.
Global Reaction Mixed
Stock indexes in Asia responded with varied results. Tokyo’s Nikkei 225 lost 1.3%, mirroring U.S. jitters, while Seoul’s KOSPI rose 0.2% and Shanghai’s Composite Index climbed 0.4%, reflecting resilience or optimism tied to regional developments.
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