Markets Tumble as Trump Threatens to Fire Fed Chair Powell

A rare and unsettling selloff hit U.S. markets on Monday after President Donald Trump renewed attacks on Federal Reserve Chair Jerome Powell, raising fears about the central bank’s independence.

All three major indexes plunged— the Dow fell 2.48%, the S&P 500 dropped 2.36%, and the Nasdaq slid 2.55%. At the same time, the yield on the 30-year Treasury spiked to 4.91%, while the U.S. dollar dropped to a three-year low.

The coordinated decline in stocks, bonds, and the dollar reflects deep investor concern that Trump could attempt to remove Powell before his term ends in 2026. While it remains legally unclear whether the president can do so, the mere threat has rattled markets.

Michael Brown, a strategist at Pepperstone, said firing Powell would spark “the most dramatic rush to the exit from U.S. assets that it is possible to imagine.” He warned that such a move would undermine global confidence in the U.S. financial system, potentially ending the dollar’s reserve currency status and Treasurys’ role as a safe haven.

Even without actual dismissal, some analysts argue the damage is already done. Will Compernolle of FHN Financial noted that legal battles over Powell’s position could erode market trust in the Fed’s independence. “If it reaches the courts, credibility may already be lost,” he said.

Trump has made no secret of his dissatisfaction with Powell, calling him “Mr. Too Late” and publicly suggesting that he should be removed. Reports indicate the president has discussed possible replacements, including former Fed Governor Kevin Warsh.

While many strategists still doubt Trump will move forward, the risk alone is enough to shift market sentiment. Evercore ISI analysts warned that even floating the idea of firing Powell adds political risk to U.S. assets and could accelerate a move toward stagflation trades—marked by higher inflation and slower growth.

As investors seek safety, gold prices have climbed and foreign assets are drawing renewed interest, signaling a growing unease with the direction of U.S. economic policy.