Dow sheds 545 points
think the Fed is out of control,” Trump said. “The Fed is far too stringent and they’re making a mistake and it’s not right. It’s not necessary, in my opinion, and I think I know about it better than they do, believe me.”
Trump said he would not fire Fed Chairman Jerome H. Powell, a Trump appointee who legally can be fired only for cause, not policy disputes. “I’m just disappointed at the clip” of rate increases, Trump said.
Larry Kudlow, Trump’s chief economic advisor, said Thursday morning on CNBC that the president “has his own views” on interest rates and “is not dictating policy to the Fed. We all know the Fed is independent.”
Kudlow also called the market’s drop this week “a normal correction in a bull market” and said that “the economy is very, very sound.”
“If you have a strong economy, that will provide confidence for stocks,” Kudlow said. “But corrections come and go. I’ll just leave it right there.”
The upshot is that “volatility is back and it may revestment quire more active strategies on the part of investors to pursue their long-term goals,” John Lynch, chief in“I strategist at LPL Financial, said in a note to clients. “But remember that fundamentals are still strong.”
Investors also are concerned about the escalating U.S.-China trade war, with the two nations slapping tariffs on billions of dollars’ worth of each other’s goods.
There is speculation that Trump might meet with Chinese President Xi Jinping at the G20 economic summit in Buenos Aires on Nov. 30, which could lead to a breakthrough in the dispute. “There may be a meeting, but it has not been set in concrete,” Kudlow said. “We’ll see.”
City National’s Peron said he expects more market volatility in the coming days. “I’d be surprised if it were a one- or two-day event and we’re done,” he said.
He also said the market was not exceptionally overpriced, noting that “the ratio of stock prices to corporate earnings, at this level of interest rates, is quite reasonable when you look at history.”
That ratio is 16.1 for the S&P 500’s average earnings forecast for the next 12 months, according to FactSet.
And in September at least, U.S. inflation rose less than expected. The consumer price index edged up 0.1% last month after rising 0.2% in August, the Labor Department said Thursday.
Financial, real estate and energy stocks were among the hardest-hit Thursday. But the market’s pullback also gave bullish investors an opportunity to buy some stocks at prices 5% to 6% lower than they had been 24 hours earlier.
Facebook shares rose 1.3% to $153.35. Delta Air Lines jumped 3.6% to $51.48, and PayPal Holdings rose 0.6% to $75.90.
U.S. crude dropped 3% to $70.97 a barrel in New York. Brent crude, the international standard, dropped 3.4% to $80.26 a barrel in London. After months of declines, the price of gold jumped by the most in two years, rising 2.9% to $1,227.60 an ounce.
The stock market’s sharp drop Wednesday also had extended overseas, with stocks tumbling in Asia and Europe on Thursday.