On Thursday, U.S. stocks were mixed. This followed an unprecedented period of public shaming of the Fed Chair Jerome Powell by President Donald Trump. As inflation surged in 2021 and 2022, Trump continued to publicly voice his frustration, demanding Powell’s firing for supposedly waiting too long to raise interest rates. His comments were made on an especially crazy trading day. Indeed, the S&P 500 lost 2.24% and the Nasdaq Composite was down by 3.07%.
The turmoil on the markets is indicative of increasing panic among businesses at their inability to plan in a climate of chaos. As many have written here on how hard it is to estimate your revenue when economic conditions are highly variable. In fact, as an illustration, United Airlines gave dual guidance directions—one if they expect a recession and one if they don’t. This flexibility is a reminder of the commitment for flexibility some businesses continue to have—and need—in these trying times.
Jerome Powell had the temerity to raise interest rates and so Trump publicly excoriated him. He proclaimed, “Jerome Powell of the Fed is always TOO LATE AND WRONG! Yesterday, he released a paper that was just another usual total ‘fiasco!’ These remarks came on the heels of Powell’s issuance of a report many saw as fuzzy at best.
Since the crisis, the European Central Bank has cut its main interest rate. This likely decision would be heavily influenced by the ramifications of Trump’s tariffs, which are poised to hit Western Europe hard. The yield on the 10-year Treasury ticked up a bit to near 4.29%, but this shows that investor appetite for riskier assets is still tentative.
Market analysts have reported deep investor angst since Trump first floated his proposal for “reciprocal” tariffs on April 2. Dan Ives, an analyst at Wedbush Securities, said, “This week was the first shots fired in the tech trade war. The White House just made it so Nvidia can’t sell its critical H20 chips to China.
In light of these headwinds, the larger S&P 500 nonetheless exploded upward, up as much as 0.4% intra-day today. This increase is a positive sign of perseverance in other industries. This week, health insurance giant UnitedHealth Group chose to lower its profit expectations for the year. This action placed significant downward pressure on the Dow and pulled it lower.
As trading wrapped up on Thursday, traders eyed the upcoming Good Friday when U.S. markets will be closed. Experts suggest that until there is greater clarity regarding tariffs and interest rate policies, volatility in markets will likely continue.
“Recent developments are a reminder that market swings are likely until there is greater certainty over the outlook for tariffs,” – Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management.