Wall Street's Volatility: How Trump's Attacks on Powell Shake Markets

The U.S. stock market faced a steep decline in early April 2025, with all three major indexes—Dow, S&P 500, and Nasdaq—plunging 2.5–3.4% over two days. The trigger? A renewed tirade from former President Donald Trump against Federal Reserve Chair Jerome Powell, whose monetary policies Trump blamed for stifling economic growth. This clash between political pressure and central bank independence has created uncertainty, rattling investors and testing the resilience of global markets.

The Trump-Powell Standoff: A Timeline of Escalation

Trump’s attacks intensified in mid-April, starting with a Truth Social post on April 16 in which he declared Powell’s termination “cannot come fast enough.” The next day, during a meeting with Italy’s prime minister, Trump publicly threatened Powell’s removal, stating, “If I want him out, he’ll be out of there real fast.” By April 21, Trump doubled down, calling Powell “a major loser” and “Mr. Too Late,” falsely claiming the U.S. faced “virtually No Inflation” despite official data showing a 2.4% year-over-year rise in the CPI.

The immediate market response was severe. The Dow dropped over 1,100 points, while the S&P 500 fell 3%, erasing 17% of its value from its February 2025 peak. Meanwhile, the U.S. dollar hit a three-year low, and gold prices surged to a record $3,452.30 per ounce—a stark sign of investor flight to safety.

Why This Clash Matters to Investors

Trump’s rhetoric isn’t just political theater—it’s a direct challenge to the Federal Reserve’s independence, a pillar of U.S. economic stability since the Fed’s creation in 1913. Powell, for his part, has repeatedly defended the central bank’s nonpartisan mandate, stating in November 2024 that he would not resign even if Trump requested it. Legal experts note that federal law bars the president from removing a Fed chair without “cause,” such as misconduct—a high bar Trump has not met.

Yet the political pressure is having real-world consequences. Treasury Secretary Scott Bessent warned that firing Powell could trigger market turmoil, given the Fed’s role as a globally trusted institution. Analysts like Evercore ISI’s Krishna Guha argue that such a move would risk a “severe reaction,” with Barclays’ Themistoklis Fiotakis noting that Trump’s actions are accelerating “de-dollarization” fears as investors shift funds to euros or gold.

Sector-Specific Impacts: Tech and Beyond

The technology sector bore some of the brunt. Tesla’s shares fell nearly 6% ahead of its earnings report, while Amazon delayed data center leasing commitments, according to Wells Fargo analysts. These moves reflect broader investor anxiety over economic uncertainty. The Nasdaq, heavily weighted in tech, dropped 3.4% during the sell-off—a sharp contrast to its 2023 rebound.

The Legal and Historical Context

No president has ever removed a sitting Fed chair, and doing so would test the limits of executive power. A Supreme Court case on independent agencies, while not directly involving the Fed, could indirectly shape the debate. However, legal scholars point to the court’s historical deference to the Fed’s unique status, established by Congress as a nonpartisan entity.

Conclusion: A Precarious Balance

Trump’s attacks on Powell have exposed a critical vulnerability in the U.S. economic system: the fragility of central bank independence. With markets reeling from political volatility, investors face a stark choice: bet on the Fed’s ability to withstand political pressure or brace for prolonged uncertainty.

The data underscores the risks. The S&P 500’s 17% drop from its February peak, Tesla’s 6% slide, and gold’s record surge all reflect investor skepticism about the administration’s approach. Historically, central bank independence has been a shield against populist economic policies—a shield now visibly strained.

If Trump’s threats escalate, the consequences could be severe. A Supreme Court challenge, market instability, or even a global flight from the dollar could follow. For now, investors are left navigating a landscape where political rhetoric has become a key driver of risk—a stark reminder that in 2025, the Fed’s autonomy is as much a political battle as an economic one.