Stocks fell again on Monday amid concern about slowing economic growth, the government shutdown and reports that Trump had discussed firing Federal Reserve Chairman Jerome Powell, whom he has repeatedly criticized for raising interest rates.US stocks have dropped sharply in recent weeks on concerns over weaker economic growth. The Dow was up 500 points by midday, the S&P 500 rose 2.4% and Nasdaq was up about 3%.
"The only problem our economy has is the Fed".
Small said markets are effectively acting like they're in a bear market situation even though there's no signs of a recession. Trump has criticized Powell and the Fed for increasing interest rates, subjecting Powell to the kind of scathing public critique that is common for senior Trump appointees but which threatens the political independence of the worlds most powerful central bank.
Presidents have met with Fed leaders in the past.
Still, Trump repeated his belief the Federal Reserve is raising interest rates too quickly, blaming the decision on a booming economy.
On Sunday, Mnuchin announced that he'd called the six largest USA banks and was reassured they have "ample liquidity available for lending". All three major United States stock indexes ended down more than 2 per cent on the day before the Christmas holiday.
The S&P 500 has lost about 19.8 per cent from its September 20 closing high, just shy of the 20 per cent threshold that commonly defines a bear market. That's 18.7 percent below its record close of 26,828.39 on October 3.
Treasury Secretary Steven Mnuchin called top US bankers on Sunday amid the pullback in stocks and said he was calling a meeting of financial regulators to discuss ways to ensure "normal market operations".
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But investors said his move to convene a call with the President's Working Group on Financial Markets, known as the "Plunge Protection team", may have weighed on sentiment on Monday. The Treasury Department issued a statement Sunday saying banks have adequate liquidity for lending, surprising investors who didn't know that might be an issue.
After Monday's Wall Street losses, Asian markets followed. "They're doing very well", he said.
Binder: So, I think that's the big question for the Fed, is how does the credibility of the Fed come out of these attacks by the president, which have been going on for a good year, even as the Fed has been incrementally raising rates.
Trump's latest remarks only created more uncertainty for already unnerved investors who have seen all of this year's stock market gains evaporate. Trump nominated Powell past year to become chairman.
The president has blamed the recent stock sell-off on Powell's interest rate policy.
But it may be lawful for Trump to remove Powell from the chairman role, Binder said.
Last week's turmoil in Washington-which included a government shutdown that appears likely to last until at least Thursday and the abrupt resignation of Defense Secretary Jim Mattis-has spooked markets worldwide.