US Stocks End Significantly Lower, Dow Falls Nearly 1,000 Points

April 21, 2025 TruthUSA

U.S. dollar-denominated assets fell sharply before recovering and turning positive.

U.S. stocks posted steep losses on April 21.

Dollar-denominated assets fell sharply before recovering and turning positive.

The U.S. Dollar Index (DXY), which measures the buck against a weighted basket of currencies, fell more than 1 percent early in the day but closed up 0.04 percent.

Changes in U.S. trade policy are bleeding into the dollar, and tariffs could threaten American investment exceptionalism, says Michael Cahill, a senior currency strategist at Goldman Sachs Research.

“We have previously argued that the U.S.’s exceptional return prospects are responsible for the dollar’s strong valuation,” Cahill said in a report. “But, if tariffs weigh on U.S. firms’ profit margins and U.S. consumers’ real incomes, they can erode that exceptionalism and, in turn, crack the central pillar of the strong dollar.”

While the Treasury market was mixed to start the trading week, the benchmark 10-year yield firmed above 4.37 percent, suggesting weaker investment demand.

This month, Treasury markets have been influenced by various developments, including the Fed’s tighter-for-longer stance, hedge-fund deleveraging, and speculation of foreign governments dumping U.S. debt holdings. Conditions quickly deteriorated after the three-year Treasury auction fell short of expectations, forcing the Treasury Department to offer high yields to stimulate demand.

Senior administration officials have remarked that they have been concentrating on the 10-year, especially with trillions of debt poised to be refinanced this year.

Interest Rate Debate

President Donald Trump has repeatedly warned of slowing economic growth unless the U.S. central bank lowers interest rates as soon as possible.

In an April 21 Truth Social post, Trump renewed his criticism of Federal Reserve Chair Jerome Powell over interest rates.

“‘Preemptive cuts’ in interest rates are being called for by many,” Trump wrote on April 21, adding that there has been “virtually no inflation.”

“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a slowing of the economy,” Trump said, unless Powell “lowers interest rates, now.”

Kevin Hassett, director of the White House National Economic Council, told reporters on April 18 that the administration is pursuing ways to terminate Powell.

“The president and his team will continue to study that matter,” Hassett said.

Powell, first appointed to the U.S. central bank by President Barack Obama, previously stated that removing him is “not permitted under the law.” The Fed chief’s term expires next year.

Treasury Secretary Scott Bessent recently confirmed that the White House will start interviewing candidates to succeed Powell in the fall.

Federal Reserve Chair Jerome Powell speaks with Raghuram Rajan, a professor of finance at the University of Chicago's Booth School, during an Economic Club of Chicago event in Chicago on April 16, 2025. (Vincent Alban/Getty Images) — Federal Reserve Chair Jerome Powell speaks with Raghuram Rajan, a professor of finance at the University of Chicago’s Booth School, during an Economic Club of Chicago event in Chicago on April 16, 2025. Vincent Alban/Getty Images

Kathy Jones, a chief fixed-income strategist at Charles Schwab, said the president’s criticisms of Powell could result in higher long-term yields.

“The irony of the effort to oust Powell is that it would probably send long-term yields higher as foreign investors intensify their exit from U.S. dollar assets—the exact opposite of what the president wants,” Jones said on social media platform X.

“Stocks down, bond yields up, curve steepening and dollar at a two-year low. That’s what the markets think about the president ’terminating’ Powell as Fed chair. It is probably less about Powell or any replacement and more about preserving some semblance of Fed independence.”

In recent weeks, monetary policymakers have signaled that they should leave interest rates unchanged in a range of 4.25–4.5 percent until they obtain greater clarity from the government’s adjustments to fiscal, immigration, regulatory, and trade policy.

Investors overwhelmingly think the Fed will keep rates on hold for the fourth straight meeting in May. According to the CME FedWatch Tool, the futures market is betting on a quarter-point rate cut in June.

Powell voiced his concerns about the president’s tariff plans at an April 16 event hosted by the Economic Club of Chicago.

“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell said. The Fed is charged with a dual mandate of maximum employment and price stability.

While Powell thinks the Fed could be moving away from those goals “probably for the balance of this year,” he believes monetary policy is well-positioned to be patient.

According to Jay Woods, chief global strategist at Freedom Capital Markets, it is a balancing act between two philosophies.

“In Powell’s mind, patience should be practiced, while the president wants to lower rates quickly to bolster a now uncertain economic path,” Woods said in a note emailed to The Epoch Times.

Recent data indicate that inflation has been low ahead of the president’s tariff implementation. As for the broader economy, the Atlanta Fed’s GDPNow Model estimate suggests that first-quarter growth will be negative 0.1 percent after adjusting for gold imports and exports.

During an April 21 interview with CBS’s “Face the Nation,” Chicago Fed President Austan Goolsbee anticipated a summer economic slowdown after an “artificially high” level of economic activity in the first quarter, driven by businesses stockpiling and consumers buying big-ticket items before Trump’s tariffs went into effect.

“Activity might look artificially high in the initial, and then by the summer, might fall off—because people have bought it all,” Goolsbee said.

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