Wall Street took a hit Monday as renewed political pressure on the U.S. Federal Reserve sent shockwaves through financial markets. U.S. stocks closed sharply lower, while the dollar slumped to its weakest level in over three years, with investors rattled by continued trade tensions and President Donald Trump’s latest attempt to oust Fed Chair Jerome Powell.

The Dow Jones Industrial Average fell by 972 points, or 2.48%, marking one of its steepest drops in recent months. The S&P 500 lost 2.36%, and the tech-heavy Nasdaq fell by 2.55%, as a broad sell-off dragged nearly every major index and sector into the red.

The downturn follows a turbulent week and sets the stage for what may become the worst month on Wall Street since 2022. At the same time, the U.S. dollar index—tracking the greenback against six major global currencies—fell over 1%, hitting levels last seen more than three years ago.

Market anxiety surged after Trump publicly escalated his attacks on Powell, saying, “If I want him out, he’ll be out of there real fast.” Trump has repeatedly criticized the Fed chief for resisting pressure to cut interest rates and blamed Powell for slowing economic momentum.

These remarks came just days after Powell warned that Trump's tariff strategy could weigh heavily on U.S. growth and spark inflation. Meanwhile, the European Central Bank moved to cut interest rates, sharpening the contrast with the Fed's current policy stance.

Trump’s aggressive rhetoric raised fresh concerns about the independence of the Federal Reserve—a cornerstone of global investor confidence in the U.S. financial system. “Markets are clearly nervous about political interference in monetary policy,” said Sam Stovall, chief investment strategist at CFRA Research. “It’s not a reassuring signal.”

Worries about long-term trade conflicts are also fueling investor unease. Talks with Japan last week ended without progress, hinting at prolonged bilateral negotiations that may stretch into mid-year.

Amid the uncertainty, traditional safe havens like gold surged, but the dollar failed to attract typical demand. Analysts see this as a troubling sign. “Confidence in the administration’s economic strategy is waning,” said Krishna Guha, vice chairman at Evercore ISI.

Treasury yields climbed, with the 10-year yield topping 4.4%, reflecting shifting sentiment. Analysts at Macquarie cited the growing concern over the Fed’s independence and the lack of clear progress on trade as key reasons behind the recent flight from the dollar.

Investors are now closely watching the start of the first-quarter earnings season. Companies like Tesla and Alphabet are scheduled to report results this week, with analysts keen to hear how CEOs are adjusting forecasts amid trade disruptions and political uncertainty.

Looking ahead, the Federal Reserve’s board is set to meet in early May to decide on interest rates. According to the CME FedWatch tool, nearly 9 in 10 market participants expect rates to remain unchanged.

As Trump continues to blur the lines between politics and central banking, the stakes are rising—not just for Wall Street, but for the broader global economy.