By Stephen Culp
NEW YORK (Reuters) - U.S. stocks suffered steep losses on Monday as U.S. President Donald Trump ramped up his attacks on Federal Reserve Chair Jerome Powell, prompting investors to worry about the central bank’s independence even as they grapple with the effects of Trump’s ongoing, erratic trade war.
All three major indexes tumbled more than 2%, with big losses in the "Magnificent Seven" group of megacap growth stocks weighing heaviest on the tech-laden Nasdaq.
The S&P 500 closed 16% below its February 19 record closing high. If the bellwether index closes 20% below that all-time high, that will confirm the index has entered a bear market.
Trump escalated his criticism of Powell on Monday, saying the U.S. economy is headed for a slowdown "unless Mr. Too Late, a major loser, lowers interest rates NOW," in a bellicose Truth Social post which raised concerns over the Fed’s autonomy.
"Countries that have an independent central bank grow faster, have lower inflation; they have better economic outcomes for their people," said Jed Ellerbroek, portfolio manager at Argent Capital Management in St. Louis. "And politicians trying to influence the Fed is a really bad idea, and it’s very scary for the market."
The Sino-U.S. trade rift deepened after Beijing warned other countries against striking deals with the United States at China’s expense, adding fuel to the spiraling tariff war between the world’s two largest economies.
"Companies are ... not sure how to respond, waiting for final answers from the United States about tariff rates," Ellerbroek added. "What makes it dispiriting, I think, is the fact that this is like self-inflicted; we’re in this situation by choice, by this administration’s choice."
The Dow Jones Industrial Average fell 971.82 points, or 2.48%, to 38,170.41, the S&P 500 lost 124.50 points, or 2.36%, to 5,158.20 and the Nasdaq Composite lost 415.55 points, or 2.55%, to 15,870.90.
All 11 major sectors in the S&P 500 ended in negative territory, with consumer discretionary and tech suffering the biggest percentage losses.
First-quarter earnings season shifts into higher gear this week with dozens of closely watched firms due to report. So far, of the 59 companies that have reported, 68% have beaten Wall Street expectations, according to LSEG data.
As of Thursday, analysts expect aggregate first-quarter S&P 500 earnings growth of 8.1%, year-on-year, down from the 12.2% growth projected at the beginning of the quarter, per LSEG.
Notable earnings on the docket this week include Magnificent Seven members Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL), and a host of high-profile industrials including Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), Lockheed Martin (NYSE:LMT) and 3M.
Artificial intelligence heavyweight Nvidia (NASDAQ:NVDA) dropped 4.5% after Reuters reported that Huawei Technologies planned to begin mass shipments of an advanced AI chip to customers in China as early as next month.
Tesla dropped 5.8% after Reuters reported that the production launch of its stripped-down version of the Model Y was delayed.
FIS gained 2.4% after a brokerage upgrade.
Declining issues outnumbered advancers by a 4.76-to-1 ratio on the NYSE. There were 77 new highs and 180 new lows on the NYSE.
On the Nasdaq, 1,205 stocks rose and 3,174 fell as declining issues outnumbered advancers by a 2.63-to-1 ratio.
The S&P 500 posted one new 52-week high and nine new lows while the Nasdaq Composite recorded 28 new highs and 184 new lows.
Volume on U.S. exchanges was 13.89 billion shares, compared with the 18.87 billion average for the full session over the last 20 trading days.
(This story has been corrected to say February 19, not June 19, in paragraph 3)