Nasdaq Drops 2% as Trump's Powell Threat Sparks Tech Sell-Off

On Monday, U.S. stocks experienced a continued decline, with the Nasdaq Composite Index falling by 2%. This downturn was driven by a significant sell-off in leading technology stocks, with Tesla (TSLA.US) dropping by more than 6%, NVIDIA (NVDA.US) by over 4%, and Broadcom (AVGO.US), Amazon (AMZN.US), and Meta (META.US) each declining by more than 3%.

The market's concern was fueled by the possibility of President Donald Trump taking action to follow through on his threat to fire Federal Reserve Chairman Jerome Powell. This uncertainty led to a broad sell-off of U.S.-related assets, causing the U.S. dollar, U.S. stocks, and U.S. bonds to all decline. The 30-year Treasury yield briefly rose by 10 basis points in the thinly traded post-holiday market. Investors were deeply concerned about the risk of Powell being dismissed and began assessing the potential impact on the U.S. economy.

The White House had previously indicated that Trump was considering this possibility. "The president and his team will continue to explore this," said White House National Economic Council Director Kevin Hassett when asked if firing Powell was an option. This statement further fueled market anxiety, as investors worried about the potential disruption to monetary policy and the broader economic implications.

The sell-off was particularly pronounced in the technology sector, with major players like Tesla, NVIDIA, and Amazon leading the decline. The collective downturn in these high-profile stocks contributed to the broader market's negative sentiment, as investors sought to mitigate risks associated with potential policy changes.

The market's reaction underscores the sensitivity of investors to political developments, particularly those involving key economic figures like the Federal Reserve Chairman. The uncertainty surrounding Powell's future has added to the volatility in the market, as investors grapple with the potential for significant shifts in monetary policy.

The situation highlights the interconnected nature of global financial markets and the impact of political decisions on investor confidence. As the market continues to digest the potential implications of Trump's actions, it remains to be seen how the situation will evolve and what long-term effects it may have on the U.S. economy and global financial stability.