U.S. stock markets experienced a sharp sell-off on Monday, April 21, 2025, with major indexes dropping over 3% amid escalating concerns over President Donald Trump’s aggressive tariff policies and his ongoing attacks on Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average (^DJI) fell 1,200 points, or 3.3%, closing at approximately 37,909.91. The S&P 500 (^GSPC) declined 3.3%, settling at around 5,107.96, while the tech-heavy Nasdaq Composite (^IXIC) dropped 3.6%, ending at 15,742.06.
The market turmoil was driven by a combination of Trump’s unpredictable tariff announcements and his intensifying criticism of Powell, raising fears about the Federal Reserve’s independence. Trump’s social media posts on Monday morning targeted Powell, calling him “Mr. Too Late, a major loser” and warning of an economic slowdown unless interest rates are lowered immediately. These remarks amplified investor unease, particularly as markets remain volatile following Trump’s “Liberation Day” tariff event on April 2, which introduced sweeping trade barriers.
Tariffs Continue to Roil Markets
Trump’s tariff policies have been a major driver of market volatility in recent weeks, with the S&P 500 down approximately 10% since the tariff rollout and 16% below its February record high. The administration’s aggressive stance, including a reported 245% tariff on Chinese imports (excluding certain electronics), has deepened trade tensions, particularly with China, which retaliated with 125% levies on U.S. goods. Beijing’s warnings to other nations against aligning with U.S. trade deals further escalated fears of a global trade war.
Investors are struggling to navigate the uncertainty surrounding these policies, with headlines about potential trade deals—such as Trump’s claims of progress with the European Union and China—offering little reassurance. “The fact that we’re down so much today after a long weekend tells me investors see more uncertainty, not less,” said Adam Sarhan, chief executive at 50 Park Investments in New York.
Powell’s Independence Under Scrutiny
Trump’s repeated calls to oust Powell, including suggestions that he could fire the Fed chair, have heightened concerns about the central bank’s ability to operate independently. Powell, whose term extends until May 2026, has emphasized the Fed’s cautious approach, noting that tariffs could fuel inflation while slowing economic growth. In a recent speech on April 16 at the Economic Club of Chicago, Powell described the Fed’s position as a “wait-and-see mode,” citing the unprecedented scale of Trump’s tariffs.
Analysts warn that undermining the Fed’s autonomy could have severe consequences. “Powell is a steady hand, a known entity, bringing stability in a world of uncertainty,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. Senator Elizabeth Warren has cautioned that markets could “crash” if Trump gains the power to remove Powell, underscoring the Fed’s critical role in maintaining economic stability.
Safe-Haven Assets Surge
As stocks plummeted, investors rushed to safe-haven assets. Gold prices surged to a record high above $3,420 per ounce, while the Swiss franc strengthened. The dollar index, meanwhile, slid to a three-year low, reflecting diminished confidence in U.S. assets amid the tariff and Fed controversies.
Tech Stocks Lead Declines
The tech sector was hit particularly hard, with Nvidia (NVDA) dropping 5.75% after warning of a $5.5 billion charge due to new U.S. restrictions on chip exports to China. Google (GOOG) also fell 2.82%, contributing to the Nasdaq’s steep losses. Tesla shares declined 6.8% following a downgrade by Barclays, which cited challenges to the company’s volume growth in 2025.
Looking Ahead
With trading volumes 33% below the 20-day average due to the Easter holiday weekend, Monday’s sell-off underscored the market’s sensitivity to Trump’s policy shifts and rhetoric. Investors are now bracing for further developments, including upcoming Big Tech earnings reports and any progress on global trade talks. However, the lack of concrete details on tariff exemptions or trade agreements continues to weigh heavily on sentiment.
As the S&P 500 remains 14% below its record high and the Dow and Nasdaq post their third negative week in four, the market outlook remains precarious. Analysts suggest that the combination of tariff-driven inflation risks and threats to Fed independence could push stocks and the dollar lower, with the S&P 500 potentially overvalued by 10-15% based on current conditions.
Sources: Yahoo Finance, Reuters, CNBC