Investing.com -- U.S. stocks extended their losses on Monday as President Donald Trump escalated criticism of Federal Reserve Chair Jerome Powell, casting renewed doubt on the central bank’s independence. Meanwhile, markets found little reassurance from global trade developments.
The Dow Jones Industrial Average dropped 971.82 points, or 2.48%, to close at 38,170.41. The fell 2.36% to 5,158.20, while the Nasdaq Composite declined 2.55% to 15,870.90.
In a post on Truth Social, Trump warned that economic growth could falter unless Powell cuts interest rates without delay, referring to him as “Mr. Too Late, a major loser.”
The message follows a similar post last week, where Trump urged the Fed to ease policy and suggested Powell’s “termination” was under consideration—a claim White House economic adviser Kevin Hassett said was being examined by the administration.
This week, investors will be closely watching the release of April flash PMI data for an early read on how recent trade policy shifts may be impacting economic activity and sentiment across major developed markets.
While the volatility seen in April has already reflected changes in market sentiment, the flash PMIs will provide some of the first concrete indicators of how business conditions are responding to evolving trade dynamics.
In addition to the PMI prints, attention will be on upcoming Fed commentary as markets look for signals about whether policymakers are more focused on inflation or slowing growth.
With the outlook for interest rates still uncertain, durable goods orders will also be in focus, offering a look at whether the front-loading of demand ahead of tariff announcements carried into March.
Packed earnings week: Google, Tesla to report
Alongside economic updates, a packed earnings calendar this week will also put pressure on a stock market already rattled by a major shift in U.S. trade policy that has clouded the global economic outlook and corporate earnings prospects.
Investor sentiment remains fragile following President Donald Trump’s sweeping April 2 tariff announcement, which triggered one of the sharpest waves of market volatility since the pandemic began five years ago.
The market selloff has hit megacap tech stocks hard, with all members of the so-called Magnificent Seven down sharply this year. Alphabet (NASDAQ:GOOGL) has fallen around 22%, while Tesla (NASDAQ:TSLA) is off by more than 43%.
Expectations for S&P 500 earnings have also softened. Full-year profit growth is now projected at 9.2%, down from 14% at the start of 2025, according to LSEG IBES.
With the impact of tariffs still being absorbed, investors fear further downward revisions as companies release results and update guidance.
A slew of high-profile companies is set to report earnings this week, including Tesla on Tuesday, Boeing (NYSE:BA) and IBM (NYSE:IBM) on Wednesday, and Alphabet and Intel (NASDAQ:INTC) on Thursday.
What analysts are saying about U.S. stocks
Morgan Stanley: “The S&P remains in the middle of our 5000-5500 trading range. Dispersion of EPS revisions is picking up, a sign that reporting season is likely more of a rotational driver. We recommend looking for quality stocks in industries where the set up is more de-risked and offer tools for idea generation.”
Evercore ISI: “We can’t help but return to the pervasive level of Bearishness that prevails on U.S. equities, and Small Caps in particular. With a 90 day window for Trade Negotiations, Small Caps are “vulnerable” to upside at the slightest of positive headlines. Gold too has seemingly become “the only asset around” as a destination for funds.”
BCA Research: "The new U.S. trade policy is bound to have a meaningful effect on US companies’ profitability. The S&P 500’s composition is skewed toward goods, and an increase in tariffs will depress profit margins and earnings growth. Earnings downgrades have already started, but they have not fully run their course. We expect more negative guidance and more downgrades. The market will bottom once lower multiples reflect a decline in profitability and lower earnings growth expectations."
