Stock Market Plunge: Powell’s Remarks, Trump’s Policies, and Global Uncertainty

The U.S. stock market experienced a decline on Thursday as investors reacted to remarks from Federal Reserve Chairman Jerome Powell and uncertainty surrounding economic policies pursued by President Donald Trump. Although a rally on Wednesday was sparked by Powell’s statement that the economy remains solid enough to keep interest rates unchanged, traders soon reversed some of those gains in early trading.

Market benchmarks were hit hard, with the S&P 500 dropping by 0.7% and the Dow Jones Industrial Average falling approximately 227 points (about 0.5%). The Nasdaq Composite also slipped by 0.7% during initial market hours.

Investor Response and Economic Indicators

Powell’s comments provided reassurance that the current economic conditions are sufficiently robust to justify maintaining existing interest rates. However, the chairman also acknowledged that prevailing uncertainties make it difficult to forecast future economic trends with precision.

A significant development came from the discount retail sector, where Five Below surged more than 11% in premarket trading after reporting quarterly sales and earnings that surpassed expectations. The company also offered an optimistic sales outlook for the near future.

Additionally, reduced yields on U.S. Treasury bonds influenced investor behavior. Lower yields tend to encourage investment in equities as buyers become more willing to invest at higher prices when fixed-income returns are modest.

Trade Policy Uncertainty and Its Impact

Market sentiment has also been shaped by ongoing concerns regarding trade policies. Recent measures—such as the implementation of new tariffs and other regulatory actions—have added to the uncertainty. Both businesses and consumers face growing hesitation in spending, partly fueled by the current administration’s approach to economic policy.

“Consumers and businesses in the United States have shown increased pessimism in recent surveys, yet the low unemployment rate indicates that the economy remains resilient.”

Jerome Powell, Federal Reserve Chairman

The Federal Reserve has opted for stability this year by keeping interest rates steady, following a series of reductions in late 2024. Although lower rates can provide a stimulus to the economy, they also carry the risk of fueling inflation. Fed officials are projecting further rate cuts—estimates suggest that as many as two additional reductions could occur before the end of the year.

Global Markets React

Uncertainty on Wall Street spilled over into international markets. European indices such as Germany’s DAX fell by roughly 1.5% and France’s CAC 40 declined around 1%, while the United Kingdom’s FTSE 100 experienced a slight dip of 0.1%.

Across Asia, technology stocks bore the brunt of the volatility. Hong Kong’s Hang Seng index ended the session down 2.2%, closing at 24,219.95, and China’s Shanghai Composite fell by 0.5%. Major technology companies witnessed notable declines—Baidu dropped significantly while Alibaba and JD.com experienced decreases in the 4–5% range.

Other Asian markets posted mixed results. South Korea’s Kospi registered a modest gain of 0.3%, Australia’s S&P/ASX 200 climbed 1.2%, and Taiwan’s Taiex improved by 1.9%, even though Thailand’s SET retreated slightly. Meanwhile, Japan’s market remained closed in observance of a public holiday.

Overall, the current financial climate is characterized by an interplay of stabilizing economic indicators, policy uncertainties, and shifting investor sentiment. Market participants are keeping a close watch on these dynamics as they navigate a period of heightened volatility.