Wall Street stocks plummeted Wednesday amid worries about surging US interest rates and the impact of trade disputes, as President Donald Trump blamed the Federal Reserve, saying it had “gone crazy.”
US shares suffered a broad-based selloff that slashed more than three percent from major indices.
“I think the Fed is making a mistake. It’s so tight. I think the Fed has gone crazy,” Trump told reporters shortly after markets closed, as he arrived in Erie, Pennsylvania for a rally.
Trump has repeatedly touted Wall Street records as proof of the success of his economic program, including his confrontational trade strategy.
But he downplayed the first major drop in months, saying, “it’s a correction that we’ve been waiting for a long time.”
He has frequently criticized the US central bank for gradually raising interest rates, and on Wednesday reiterated his position: “I really disagree with what the Fed is doing.”
In fact it is his policies that are behind the changes: tax cuts and spending policies are expected to juice the economy, adding to the Fed’s justification to raise interest rates, while trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings — something analysts said helped prompt Wednesday’s sell-off.
The rout in US shares followed substantial losses on European bourses, due in part to tensions between Brussels and Rome over Italian budget plans that have revived fears about the eurozone.
“There are a number of worries for investors right now, from the pace of rising bond yields and the impact on investor sentiment, to Italy’s populist coalition playing a game of chicken with the European Commission, stalling Brexit negotiations and the ongoing trade conflict between the US and China,” said Craig Erlam, senior market analyst at Oanda trading group.
Big names fall hard