Jamie Spencer
U.S. stocks continued their volatile run on Tuesday, with the tech-heavy Nasdaq leading the losses, down 2.5%, while the Dow Jones and S&P 500 also slid. The market remained jittery as geopolitical tensions, concerns over President Trump’s tariff policies, and uncertainty around Federal Reserve independence weighed heavily on investor sentiment.
Stocks React to Tariff Concerns and Fed Criticism
On the back of rising tariffs and ongoing trade war concerns, markets struggled to find stability. The Nasdaq lost 2.5%, the S&P 500 fell 2.1%, and the Dow Jones tumbled 783 points, or 2%. Investors also grappled with President Trump’s recent comments targeting Federal Reserve Chairman Jerome Powell, further adding to market volatility.
President Trump’s critique of Powell and his calls for preemptive rate cuts by the Fed have only deepened investor fears, shaking confidence in U.S. monetary policy. “Any reduction in the independence of the Fed would add upside risks to an inflation outlook already subject to upward pressures from tariffs,” said Michael Feroli, Chief U.S. Economist at JPMorgan.
Economic Growth Concerns Intensify
The International Monetary Fund (IMF) recently downgraded its U.S. economic growth forecast to 1.8% for 2025, citing the ongoing impact of tariffs and policy uncertainty. While growth is still expected in the second quarter, analysts are concerned about the long-term economic effects of the trade war and the political drama surrounding the Federal Reserve.
“The economic damage done from this Trump back-and-forth tariff plan has likely pushed the economy toward a recession,” Wedbush analysts warned. “Capex has been halted across the board, hiring plans paused, and there’s chaos in the supply chain. It’s all creating a level of uncertainty not seen since COVID.”
Gold Surges Amid Economic Fears
As the political and economic uncertainty deepens, gold prices have soared to record highs. Spot gold rose by 2.6%, reaching a new peak of $3,415.24 an ounce. Investors are increasingly flocking to gold as a safe haven asset in the face of rising geopolitical tensions and fears over the stability of U.S. policies.
“The threat to the Fed’s independence has added fuel to an already bullish gold market,” said Daniela Sabin Hathorn, Senior Market Analyst at Capital.com. “Investors see gold as a hedge against the political and economic instability that has intensified in recent weeks.”
Corporate Earnings and Trade War Impact
Despite the turbulent market, several companies reported earnings results, with Tesla, BOK Financial, and GE Aerospace among the key announcements. Tesla’s stock rose over 6% ahead of its quarterly earnings report, while GE Aerospace’s shares climbed 5% after reporting strong earnings and announcing efforts to mitigate the impact of rising tariffs.
Meanwhile, stocks in the defense and telecom sectors saw mixed results. Northrop Grumman missed earnings expectations, and its stock dropped by 13%, while 3M’s earnings exceeded forecasts, pushing its shares up by 8.5%. Verizon reported losses in postpaid phone subscribers, leading to a fractional rise in shares.
Conclusion: A Tumultuous Time for Investors
With trade tensions escalating and the Fed’s independence under scrutiny, the market remains on edge. Corporate earnings reports will continue to be under the microscope, as investors seek clarity amid the uncertainty. The next few days will be crucial in determining whether the market can regain its footing or whether the volatility will continue.
