Wall Street tumble: Monday saw a sharp drop as international investors grew more wary of U.S. assets. President Donald Trump’s trade war and his constant criticism of the Federal Reserve stoked the sell-off and raised doubts about the state of the American economy.
Another wipeout of the S&P 500
The S&P 500 fell 2.4%, which is a 16% decline from the record it established two months ago. In line with this, the Dow Jones Industrial Average fell by 971 points, or 2.5 percent. The Nasdaq composite fell 2.6% as a result of losses in significant tech firms, such as Tesla and Nvidia.
U.S. Bonds and Dollar See Unprecedented Slump
In an unusual turn, U.S. government bonds and the U.S. dollar also tumbled. Typically, Treasurys and the dollar strengthen during times of uncertainty, but Washington’s policies have begun to cause fears over the country’s financial stability. This shift threatens to undermine the U.S. reputation as a safe investment haven.
The Trump Aspect
Markets are being shaken by President Trump’s assertive trade policies, particularly his proposed tariffs. His statements have sparked worries that an unresolved trade dispute would cause the country to enter a recession, especially when directed at China and other international allies.Economists and investors have voiced concerns about the potential repercussions of these trade restrictions.
Fears in the Market Are Caused by Fed Tensions
Trump’s constant criticism of Jerome Powell, the chair of the Federal Reserve, is another source of disagreement. Trump’s constant calls for rate reduction have heightened worries that the Fed’s independence may be jeopardized, which would result in inefficient inflation control. The increasing market volatility is exacerbated by this worry of a weaker Fed.
Big Tech Dragging the Market Down
Tesla and Nvidia were among the hardest-hit stocks, with Tesla’s shares falling by 5.7%. Tesla’s stock has now dropped over 50% from its December peak, as investors question whether the company’s stock price was overinflated.Nvidia’s losses were also worrisome since its financial future has been jeopardized by export restrictions on chips to China.
Gold Shines Amid Market Uncertainty
While most markets faltered, gold saw an uptick, reinforcing its status as a safe-haven investment during times of volatility. Gold’s rise is seen as a signal that investors are seeking stability outside of traditional U.S. assets.
Bond Market Dynamics
In the bond market, shorter-term Treasury yields fell as investors anticipate the Fed may cut its main overnight interest rate later this year to stimulate the economy. However, longer-term yields rose, reflecting doubts about the long-term prospects of the U.S. economy.
Decline of the Global Dollar
As worries about the viability of the American financial system grew, the value of the dollar declined relative to other major currencies, such as the euro and the Japanese yen.
Source: AP News
