Advertisements
16.4 C
London
Thursday, July 2, 2020

Wall Street spooked on Christmas Eve by Donald Trump’s dig at Federal Reserve

Must read

Trump changes position and says he is ‘all for masks’

US President Donald Trump appears to have shifted his stance on wearing a face covering in public, saying in an interview that he is...

Australian newspaper loses appeal against Geoffrey Rush defamation payout

An Australian court has rejected a newspaper publisher’s appeal against Oscar-winning actor Geoffrey Rush’s 2.9 million Australian dollars (£1.6 million) payout for defamation. Three Federal...

Dozens killed as gunmen open fire in Mexico rehab centre

At least 24 people have been killed and seven others wounded after gunmen burst into an unregistered drug rehabilitation centre in central Mexico and...

Putin could stay in power until 2036 after referendum victory

A majority of Russians have approved amendments to Russia’s constitution allowing President Vladimir Putin to hold power until 2036, election officials said. However, the referendum...

President Donald Trump’s attack on the Federal Reserve spooked financial markets on Christmas Eve, raising fears about an uncertain future should the White House try to undermine or remove the head of the US central bank.

Treasury Secretary Steven Mnuchin’s calls to the top executives at six major banks on Sunday in an attempt to stabilise jittery markets had the opposite effect.

The major indexes on Wall Street fell another 2% on Monday, making it very possible that the market will end this month as the worst December for stocks since 1931.

The market has been struggling for most of the month over concerns about a slowing global economy, an escalating trade dispute with China and recent interest rate hike by the Federal Reserve.

The past two trading days, however, have been dominated by something else: major losses immediately following tweets from the president criticising Fed chairman Jerome Powell and the central bank, which sets monetary policy for the nation.

Mr Trump’s morning tweet blasting the Fed generated fears about the economy being destabilised by any efforts to undermine Mr Powell or strip him of office.

“We’ve never seen anything like this full-blown and full-frontal assault,” said Peter Conti-Brown, a financial historian at the Wharton School of the University of Pennsylvania.

“This is a disaster for the Fed, a disaster for the president and a disaster for the economy.”

Fed board members are nominated by the president, but they have historically made decisions independent of the White House in order to shield decisions about employment and inflation from political manoeuvring.

Mr Trump has voiced his anger over the Fed’s decision to raise its key short-term rate four times this year.

Federal Reserve Chairman Jerome Powell

Those measures are intended to prevent the economy from overheating at a time of brisk growth and an unemployment rate near a half-century low.

Mr Trump’s latest remarks, which came after administration officials spent the weekend trying to reassure financial markets that Mr Powell’s job as Fed chairman is safe, created more uncertainty for already unnerved investors that have seen all of the stock market gains from this year evaporate.

“Now we’re having a correction and we’re down for the year, so the narrative people get drawn to is that perhaps (Trump’s) more unpredictable policies are bad for the market,” said Craig Birk, chief investment officer at Personal Capital.

“The separation between the president and the Fed, maybe just causes a little more concern than it would have a few months ago.”

The S&P 500 index slid 65.52 points, or 2.7%, to 2,351.10.

The Dow Jones Industrial Average sank 653.17 points, or 2.9%, to 21,792.20.

The Nasdaq skidded 140.08 points, or 2.2%, to 6,192.92.

Advertisements

- Advertisement -

More articles

- Advertisement -

Latest article

Trump changes position and says he is ‘all for masks’

US President Donald Trump appears to have shifted his stance on wearing a face covering in public, saying in an interview that he is...

Australian newspaper loses appeal against Geoffrey Rush defamation payout

An Australian court has rejected a newspaper publisher’s appeal against Oscar-winning actor Geoffrey Rush’s 2.9 million Australian dollars (£1.6 million) payout for defamation. Three Federal...

Dozens killed as gunmen open fire in Mexico rehab centre

At least 24 people have been killed and seven others wounded after gunmen burst into an unregistered drug rehabilitation centre in central Mexico and...

Putin could stay in power until 2036 after referendum victory

A majority of Russians have approved amendments to Russia’s constitution allowing President Vladimir Putin to hold power until 2036, election officials said. However, the referendum...

Jay-Z’s Made In America festival postponed because of pandemic

Jay-Z’s annual festival in Philadelphia, Made in America, will not take place on Labour Day weekend due to the coronavirus pandemic. In a statement on...
%d bloggers like this: