Nasdaq Falls 2.5% as Fed Independence in Doubt, Risk Appetite Fades
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The Nasdaq Composite plunged 2.55% on Monday, extending its sharp correction as political turmoil overtook economic fundamentals. The latest market jolt came after President Donald Trump intensified his attacks on Federal Reserve Chair Jay Powell, calling him a “major loser” and “Mr. Too Late,” while demanding immediate rate cuts. These comments have reignited concerns about the Fed’s independence, casting doubt over the future trajectory of U.S. monetary policy at a time when markets are already grappling with mixed economic signals and renewed trade tension.
Tech stocks bore the brunt of the selloff, with high-growth names leading the downside. Tesla dropped 5.75%, Nvidia fell 4.51%, and Amazon lost 3.06%, while Meta also declined by more than 3%. All members of the so-called Magnificent Seven closed in the red. The dollar extended its slide amid political pressure and rising uncertainty over central bank leadership, reinforcing the broader risk-off sentiment. As capital rotated out of equities, safe havens surged—gold prices approached the psychologically significant $3,500 per ounce mark, signaling that investors are positioning for prolonged volatility.
The combination of increased political risk and weakening confidence in institutional stability is proving particularly toxic for rate-sensitive, forward-looking sectors like tech. With real yields adjusting and implied equity volatility on the rise, traders are now re-evaluating growth expectations and risk premia across the board. Markets are not only pricing in potential rate cuts, but also a deeper deterioration in macro visibility.
From here, the focus shifts to Fed credibility and market response to further political escalation. Any formal moves to undermine Powell’s leadership or interfere with monetary policy decisions could trigger an additional markdown in tech multiples, especially if inflation expectations become unanchored. Investors should closely monitor Fed communications, futures market pricing, and speculative positioning in gold. Technically, the Nasdaq’s 15,000 support zone and the $3,500 level in gold will be key barometers for near-term market direction.
Tech stocks bore the brunt of the selloff, with high-growth names leading the downside. Tesla dropped 5.75%, Nvidia fell 4.51%, and Amazon lost 3.06%, while Meta also declined by more than 3%. All members of the so-called Magnificent Seven closed in the red. The dollar extended its slide amid political pressure and rising uncertainty over central bank leadership, reinforcing the broader risk-off sentiment. As capital rotated out of equities, safe havens surged—gold prices approached the psychologically significant $3,500 per ounce mark, signaling that investors are positioning for prolonged volatility.
The combination of increased political risk and weakening confidence in institutional stability is proving particularly toxic for rate-sensitive, forward-looking sectors like tech. With real yields adjusting and implied equity volatility on the rise, traders are now re-evaluating growth expectations and risk premia across the board. Markets are not only pricing in potential rate cuts, but also a deeper deterioration in macro visibility.
From here, the focus shifts to Fed credibility and market response to further political escalation. Any formal moves to undermine Powell’s leadership or interfere with monetary policy decisions could trigger an additional markdown in tech multiples, especially if inflation expectations become unanchored. Investors should closely monitor Fed communications, futures market pricing, and speculative positioning in gold. Technically, the Nasdaq’s 15,000 support zone and the $3,500 level in gold will be key barometers for near-term market direction.