On Monday, U.S. stocks suffered a severe blow, with all three major indexes falling by more than 2%. Trump intensified his criticism of Federal Reserve Chairman Powell, stating that the U.S. economy would face a slowdown and demanding the Fed to lower interest rates. This has increased investor concerns about the Fed’s independence. Trump's remarks were particularly sharp on the social media platform Truth Social, where he labeled Powell a "loser" and warned that unless swift action is taken, the economy would face greater difficulties.
The downward pressure on the stock market mainly came from large growth stocks, particularly the tech sector, which had the biggest drag on the Nasdaq index. The S&P 500's closing level was already 16% lower than its historic high on June 19. A further decline to 20% would mean the index has entered a bear market.
Jed Ellerbroek, a portfolio manager at Argent Capital Management, pointed out that attempts to influence the Fed’s independence bring great uncertainty to the market, ultimately affecting economic growth and inflation. He emphasized that an independent central bank contributes to better economic performance, and political interference undoubtedly poses risks. Market confusion was exacerbated by uncertainty over tariff policies, leaving investors unsure while awaiting final outcomes.
Specifically, in Monday’s trading, the Dow Jones Industrial Average fell by 2.48%, closing at 38,170.41 points; the S&P 500 declined by 2.36%, settling at 5,158.20 points; while the Nasdaq index plunged 2.55%, ending at 15,870.90 points. All 11 major sectors of the S&P 500 closed lower, with consumer discretionary and technology sectors seeing the largest declines.
As the first-quarter earnings season reaches its peak, several heavyweight companies will announce their earnings this week. According to data from London Stock Exchange Group (LSEG), of the 59 companies that have reported earnings, 68% exceeded Wall Street expectations. However, analysts have downgraded their overall earnings growth forecast for S&P 500 constituents for the first quarter from an initial 12.2% increase to 8.1%.
Noteworthy earnings this week include members of the "Magnificent Seven" like Tesla and Alphabet, as well as a range of industrial giants such as Boeing, Northrop Grumman, Lockheed Martin, and 3M. Meanwhile, Nvidia and Tesla also experienced stock price drops, with Nvidia down 4.5% and Tesla plunging 5.8% following a Reuters report about the postponement of production for Tesla's low-cost Model Y, causing investor concern.
