Chaos in US market: Dow-Nasdaq fell more than 2% due to Trump's Fed Reserve statement, panic among investors

New Delhi, 21 April 2025: The US stock market witnessed a huge decline, when the Dow Jones Industrial Average and Nasdaq Composite fell more than 2%. The cause of this devastation was President Donald Trump's statement to sack Federal Reserve Chairman Jerome Powell. Trump spoke of Powell's "soon dismissal" on his social media platform Truth Social on April 17, causing uncertainty and panic among investors. Global financial markets were also affected by this news. Let us understand the causes and effects of this decline with facts.

Trump's statement: Why is there panic in the market?

On April 17, 2025, Trump wrote on Truth Social, "Jerome Powell's termination should happen as soon as possible. The European Central Bank (ECB) is lowering rates for the seventh time, but Powell is harming the economy with wrong policies." This statement was in response to Powell's comment, in which he described Trump's tariffs as increasing inflation. "Tariffs will increase prices and slow economic growth," Powell said at the Chicago Economic Club on April 16.

After Trump's statement, the Dow Jones fell 900 points (2.2%) and the Nasdaq 350 points (2.3%) on April 18. The S&P 500 also closed down 2%. Trump's threat raised questions about the independence of the Fed, which shook investor confidence. According to Bloomberg, this decline caused the S&P 500 to lose $1.2 trillion in market value.

Federal Reserve and Powell's removal: How likely?

Under the Federal Reserve Act of 1913, the chair can only be removed for "cause" such as misconduct or incapacity. Policy disagreement is not covered under it. "It is not legally possible to remove me," Powell said in November 2024. Still, Trump's team, which includes National Economic Council Director Kevin Hassett, plans to challenge the Supreme Court's 1935 Humphreys Executor decision. This decision protects the heads of independent agencies from dismissal.

Market impact: Uncertainty and volatility

Even before Trump's statement, US markets were unstable due to tariff policies. On April 2, 2025, Trump announced “Liberation Day” tariffs of 10% on all imports and 145% on China, causing the Dow to fall 4,000 points (9.48%), the S&P 500 10%, and the Nasdaq 11%. The loss was $6.6 trillion, the largest two-day loss in history.

On April 9, Trump extended the tariff waivers for 90 days, sending the S&P 500 up a record 9.52%. But the threat to fire Powell again rattled markets. Treasury Secretary Scott Bessent warned the move could increase market volatility. International Monetary Fund (IMF) Managing Director Kristalina Georgieva said, “Undermining the Fed’s independence would undermine global confidence.”

 Uproar on social media

#TrumpVsPowell and #StockMarketCrash are trending on social media platform X. One user wrote, "Trump wants to take over the Fed, but it will ruin the US economy." The news also caught attention in India, as the Fed's policies affect the Indian stock market. A post on X said, "Trump's statement will cause havoc in the US market, Sensex will also be affected in India."

Global and Indian context

An attempt to remove Powell could increase volatility in the US dollar and bond market, which will affect emerging markets like India. Reserve Bank of India (RBI) Governor Shaktikanta Das has emphasized the importance of independent monetary policy. The 10-year Treasury yield was at 4.4% on April 18, reflecting investors' concern.

Future Fears

Experts believe that if Trump succeeds in removing Powell, the Fed's policy autonomy will weaken, which could lead to a surge in inflation and interest rates. JPMorgan warned that this could increase the risk of recession in the US economy by 45%. On the other hand, Trump claims that his policies will make the economy "richer"

Conclusion

Trump's statement to sack Powell led to a massive drop in the US stock market, pushing the Dow and Nasdaq down by more than 2%. Questions over the Fed's independence and the uncertainty of tariff policies have created fear among investors. Will Trump be able to control the Fed, or will Powell save his position? This question will affect the future of the global economy. Countries like India will also have to be prepared for this instability.