Trump renews attacks on Fed chair

Stocks slumped, bonds sold off and the US dollar continued to lose ground Monday as President Donald Trump renewed his attacks on Jerome Powell, the chair of the Federal Reserve, unnerving already-anxious investors who see the independence of the central bank as critical to the health of the American economy.

- DANIELLE KAYE KEVIN GRANVILLE

Wall Street began the day with a slump, but the sell-off gained steam after Trump targeted Mr Powell in a social media post, calling him “a major loser” and urging the Fed to cut interest rates. Trump also suggested that an economic slowdown would be Mr Powell's fault.

After a late recovery, the S&P 500 dropped 2.4% for the day. All of the major sectors in the index fell, with the technology, energy and consumer discretionary sectors hardest hit.

The president's attacks on Mr Powell add to uncertainty that has already been injected into financial markets by the chaotic rollout of tariffs and threats of more to come, said John Mowrey, chief investment officer at NFJ Investment Group.

“There's a slew of things that could be very unsettling to the market as it tries to navigate what it doesn’t really know how to navigate, which is policy uncertainty about tariffs,” Mr Mowrey said, adding that “Powell is one of them.”

The Trump administration has acknowledged an uptick in the probability of a recession. Trump's criticism of Mr Powell, Mr Mowrey said, signals an effort to “have the cards ready to blame other people should that occur.”

Trump had also lashed out at Mr Powell last week, saying to reporters Thursday that “if I want him out, he'll be out of there real fast — believe me.”

A day earlier, the Fed chair had warned in a speech that tariffs could create a “challenging scenario” by putting the central bank’s two main goals — stable inflation and a healthy labour market — in tension.

DOLLAR CONTINUES SLIDE