Trump vs. Powell: Market Jitters Rise 21/04/2025

HOT stories for today
 

US market wrap:
 

• The S&P 500 edged up in volatile trading on Thursday but ended the holiday-shortened week with a loss, as concerns over tariffs continued to unsettle investors. The broad-market index gained 0.13%, while the Nasdaq Composite dipped 0.13%. Meanwhile, the Dow Jones Industrial Average dropped 527.16 points, or 1.33%, closing at 39,142.23. The 30-stock benchmark was dragged down by a 22% plunge in UnitedHealth shares after the insurer reported weaker-than-expected earnings. Both the Dow and Nasdaq logged three consecutive days of declines.
• Nvidia fell nearly 3% on Thursday, extending its almost 7% slide from the prior session. Stocks briefly rallied Thursday afternoon after President Donald Trump expressed optimism about reaching trade agreements with China and the European Union. This came just a day after Federal Reserve Chair Jerome Powell rattled markets by warning that Trump’s tariff measures could push inflation higher in the short term and pose difficulties for the Fed.
   

Trump vs. Powell: Market Jitters Rise
 

• Ahead of President Trump’s second inauguration, many on Wall Street believed he should be taken “seriously, but not literally.” Recent market turmoil suggests that was a miscalculation. Trump’s aggressive tariff policies surprised investors, and now there’s concern he might try to fire Federal Reserve Chair Jerome Powell. Strategists warn such a move could rattle markets and hurt the economy. Kathy Jones of Schwab said Trump clearly wants Powell out to lower rates, but doing so would damage the Fed’s independence. Trump recently criticized Powell on social media, calling him “Too Late” and urging the Fed to follow the ECB’s rate cuts.
• Powell, meanwhile, has said the Fed will wait to assess the economic effects of tariffs. Despite a September rate cut, the Fed has held steady in 2025. Powell has also made it clear he won’t step down voluntarily. Legal questions remain about Trump’s authority to remove Powell. A pending Supreme Court case (Trump v. Wilcox) could expand presidential power and threaten the Fed’s autonomy. Despite the tension, markets ended Thursday modestly higher. Still, strategists like Steve Sosnick caution that undermining the Fed could drive away foreign investors. Jay Hatfield argues Trump may have grounds for dismissal, but others warn it would damage U.S. credibility.
   

Stocks on the move:

• Alphabet (GOOGL) — Shares of the tech giant slid 1.4% after a federal judge ruled Google unlawfully dominated the online ad tech space, specifically in publisher ad servers and ad exchange platforms.
• Hertz (HTZ) — The car rental company soared 43.9% to a new 52-week peak, building on a 56% rally from the prior day after Bill Ackman’s Pershing Square disclosed a substantial investment.
• Nvidia (NVDA), Advanced Micro Devices (AMD) — Nvidia fell nearly 3% and AMD lost about 1%, extending losses from the previous session as the chipmakers revealed new charges tied to export restrictions to China under Trump’s proposed tariffs.
• Eli Lilly (LLY) — The pharma company surged 14.3% after announcing that its once-daily obesity drug, orforglipron, produced favorable outcomes in late-stage trials, matching analyst expectations on weight loss and side effect data.
• D.R. Horton (DHI) — Shares rose 3.2% even though the homebuilder reported second-quarter earnings that missed analysts’ estimates.

Today’s action
 

• Asia-Pacific equities opened the week on an uneven note Monday, reflecting investor caution as China’s central bank opted to maintain its key lending rates, even as the yuan continues to feel the strain of escalating trade tensions with the United States. On the mainland, the CSI 300 index nudged up 0.15% following the People's Bank of China’s decision to leave its loan prime rates unchanged. Meanwhile, Japan’s markets stumbled, with the Nikkei 225 shedding 1.33% and the broader Topix index slipping 1.3%. In South Korea, the Kospi edged lower by 0.16%, extending the region's muted tone.
• Across the Pacific, U.S. stock futures slid in early trading Monday, deepening concerns after Wall Street endured its third weekly decline in the last four. Futures linked to the S&P 500 retreated 0.79%, while the Nasdaq-100 contracts dropped 0.82%. The Dow Jones Industrial Average futures were also down sharply, falling 318 points, or 0.81%. Investors are now focusing on a critical week of corporate earnings, with over 100 S&P 500 companies set to release quarterly results. Among the most anticipated are heavyweights from the so-called “Magnificent Seven,” including Alphabet and Tesla, and aerospace titan Boeing.

Watchlist: NVDA, UNH, TSLA, AMD, GOOGL, PLTR, SOUN, NFLX
 

Bitcoin
 

• Bitcoin traded at $84,068 on April 20, 2025, recovering from a recent low of $74,434. With a market cap of $1.66 trillion and $12.23 billion in daily volume, the price hovered between $84,037 and $85,470. Chart signals suggest a possible bullish reversal—but not without mixed signals. 
• Interestingly, Bitcoin’s correlation with gold is strengthening. “Gold and Bitcoin are telling us that a weaker US dollar and more uncertainty are on the way,” noted The Kobeissi Letter, citing gold’s 55th all-time high in 12 months. The U.S. Dollar Index (DXY) has fallen 10% this year, adding weight to the safe-haven narrative driving both assets.
  Watchlist: Bitcoin: 74,000-100,000, Ethereum: 1500- 2600, Solana: 80-150
   

Forex

• The Japanese Yen continued its safe-haven rally on Monday, dragging USD/JPY to multi-month lows near 145. Trade uncertainty and diverging Fed-BoJ policy outlooks are fueling yen strength, though technicals hint at overstretched conditions.
• Meanwhile, the euro jumped over 1%, with EUR/USD breaching 1.1500 for the first time since 2021. Recession fears, Fed credibility concerns, and stalled U.S.-EU trade talks are all pressuring the dollar and boosting the euro.
  Watchlist: EUR/USD: 1.0700-1.1152, USD/JPY: 143-150
   

Basic Materials
 

• Gold (XAU/USD) held near record levels around $3,400 in Monday’s Asian session, supported by safe-haven flows amid deepening US-China trade tensions. A slumping US dollar—now at a two-year low due to recession fears—further boosted the metal, though overbought technicals suggest caution for new bulls.
• Meanwhile, WTI crude dipped 1.5% to around $62.80, snapping a two-day rally. Easing supply disruption concerns pressured prices, though a weaker dollar may cushion further losses. Traders now look to global flash PMIs for fresh direction.
  Watchlist: GOLD 2600-3380, US Oil: 57.00-70.00

Key Economic Events Today:

EST time
08:30 am: USD FOMC Member Goolsbee Speaks
10:00 am: USD CB Leading Index

Earnings

BMO (Before the US Market opens)
CMA         Comerica Inc.
AMC (After the US Market closes): WRB, ELS, WAL, ZION

The TEFS Analyst team wishes you a successful day!