US Stocks Plunge 2.5% Amid Trump-Powell Tensions, Trade Fears

On April 21, the US stock market experienced a significant downturn, with the S&P 500 dropping 2.4%, the Nasdaq slipping 2.5%, and the Dow Jones losing 2.5%, or nearly 1,000 points. This decline follows escalating tensions between US President Donald Trump and Federal Reserve Chair Jerome Powell, as well as growing concerns over the impact of trade tariffs. Trump has repeatedly called for lowering interest rates, which Powell has kept high at 4.5%.

Trump's latest salvo against Powell came via his social media platform Truth Social, where he wrote, “‘Preemptive Cuts’ in Interest Rates are being called for by many.” He also claimed that there is virtually no inflation, citing lower energy costs and food prices. Powell, however, has warned that Trump’s trade tariffs could lead to a dangerous economic mix of rising prices and slowing growth, or “stagflation.”

In response to Powell's comments, Trump called for his termination, stating that it “cannot come fast enough.” The Fed is expected to maintain its wait-and-see policy approach at its May 7 meeting, with interest rate markets predicting just a 13% chance of a rate cut. The US Dollar Index (DXY) has also slipped more than 10% so far this year, falling to a three-year low below 98 on April 21. This devaluation of the US dollar has been driven by global demand for a weaker dollar to service dollar debts, according to Real Vision founder and CEO Raoul Pal.

Meanwhile, crypto markets have held on to weekend gains with total capitalization remaining at $2.83 trillion. Bitcoin (BTC) is keeping digital asset markets buoyed, hitting a four-week high of $88,500 on April 22. Bitfinex analysts commented that amid one of the most turbulent periods for global markets in years, Bitcoin is showing impressive resilience.

In summary, the US stock market experienced a significant downturn on April 21, driven by escalating tensions between Trump and Powell, as well as concerns over trade tariffs. The US dollar has also continued to weaken, while crypto markets have held on to gains, with Bitcoin showing impressive resilience.

Analysis: The recent downturn in the US stock market and the weakening of the US dollar can be attributed to the escalating tensions between Trump and Powell, as well as concerns over trade tariffs. Trump's calls for lowering interest rates and Powell's warnings of stagflation have added to the uncertainty in the market. However, the resilience of crypto markets, particularly Bitcoin, suggests that investors are seeking alternative assets in times of market turbulence. The Fed's wait-and-see policy approach and the low probability of a rate cut at its May 7 meeting may also be contributing to the market's uncertainty.