Rising Risks: Wall Street Retreats as the Fed and China Add Pressure
The calm didn’t last long. Wall Street lost ground amid internal political tensions, new tariffs from China, and warning signs from the Fed. While some companies surprised to the upside, the overall tone turned more cautious.
The environment continues to deteriorate, generating uncertainty among investors despite some positive corporate results. The week was marked by a broad sell-off in U.S. stock markets, driven by a combination of domestic political tensions, new trade threats from China, and warning signals from the Federal Reserve.
Weekly Summary
Wall Street Closes in the Red The S&P 500 fell 1.16%, the Dow Jones dropped 500 points, and the Nasdaq declined 1.54%.
Trump vs. Powell Tensions between the president and the head of the Federal Reserve raise doubts about political and economic stability.
China Responds with 125% Tariffs The Chinese government imposes tariffs on U.S. products and issues warnings to its trade partners.
Mixed Results for Major Companies Netflix exceeds expectations and rises; UnitedHealth cuts its forecast and plunges 22%.
Wall Street Reacts with Losses
The main U.S. stock indexes closed the week lower. The Dow Jones fell more than 500 points, the S&P 500 dropped 1.16%, and the Nasdaq declined by 1.54%. Analysts attribute the downturn to a mix of internal political tensions and troubling signs about the future economy, amid growing distrust toward the government’s monetary and trade policy decisions.
Trump Increases Pressure on the Fed
Throughout the week, President Donald Trump intensified his criticism of Federal Reserve Chairman Jerome Powell for not cutting interest rates amid an expected slowdown in growth.
He even publicly suggested he’s considering Powell’s removal. This conflict has raised concerns about the Fed’s independence and sowed doubts among institutional investors regarding the future direction of U.S. economic policy.
Federal Reserve Warns of Inflation
Meanwhile, Jerome Powell warned that tariffs imposed by the administration could increase inflation and affect job creation. Amid the uncertainty, the Fed decided to keep rates steady for now, pending more conclusive data.
China Responds Firmly
In a move that further escalated trade tensions, China imposed 125% tariffs on U.S. products, especially in key sectors such as processed foods, electronics, and chemicals. It also issued a clear message: any country supporting U.S. measures may face similar retaliation.
Corporate Index Update
Among the most notable quarterly reports:
Netflix (NFLX) surprised with $10.54 billion in revenue and earnings per share of $6.61, pushing shares higher.
In contrast, UnitedHealth Group (UNH) dropped 22% after lowering its 2025 earnings guidance, citing rising medical costs linked to Medicare Advantage plans.
Final Analysis
There’s been a clear shift in market sentiment—from the euphoria of previous weeks to a new dose of realism. Tensions between Trump and the Fed, China’s strong reaction, and the ups and downs in corporate results are shaping a volatile environment. For investors, it is key to remain calm, watch macroeconomic signals, and strengthen diversification strategies as this may be an especially challenging quarter.
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Sources Business Insider AP News CBS News MarketBeat