Financial Markets                      04/21 09:41

   

   NEW YORK (AP) -- U.S. stocks are sinking Monday as investors pull away from 
the United States because of the uncertainty caused by President Donald Trump's 
trade war and his criticism of the Federal Reserve.

   The S&P 500 was 1.2% lower in early trading and back to 15% below its record 
set two months ago. The Dow Jones Industrial Average was down 430 points, or 
1.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.5% lower.

   Perhaps more worryingly, U.S. Treasury bonds and the value of the U.S. 
dollar also sank as a retreat continues from U.S. markets. It's an unusual move 
because Treasurys and the dollar have historically strengthened during past 
episodes of nervousness. But this time around, it's policies directly from 
Washington that are causing the fear and potentially weakening their 
reputations as some of the world's safest investments.

   Trump continued his tough talk on trade over the weekend, even as economists 
and investors continue to say his stiff proposed tariffs could cause a 
recession unless they're rolled back.

   "The golden rule of negotiating and success: He who has the gold makes the 
rules," Trump said in all capitalized letters on his Truth Social Network. He 
also said that "the businessmen who criticize tariffs are bad at business, but 
really bad at politics," also in all caps.

   Trump has recently focused more on China, the world's second-largest 
economy, which upped its own rhetoric against the world's largest economy. 
China on Monday warned other countries against making trade deals with the 
United States "at the expense of China's interest" as Japan, South Korea and 
other countries try to negotiate agreements that would lower U.S. tariffs on 
their own products.

   "If this happens, China will never accept it and will resolutely take 
countermeasures in a reciprocal manner," China's Commerce Ministry said in a 
statement.

   Also hanging over the market are worries about Trump's anger at Federal 
Reserve Chair Jerome Powell. Trump last week criticized Powell again for not 
cutting interest rates sooner to help give the economy more juice.

   The Fed has been resistant to lowering rates too quickly because it does not 
want to allow inflation to reaccelerate after it has slowed nearly all the way 
down to its 2% goal from more than 9% three years ago.

   A move to fire Powell would likely send another bolt of fear through 
financial markets. While investors would love to see lower interest rates, 
because they would give at least a short-term boost to prices for stocks and 
other investments, the larger worry is that a less independent Fed would be 
less effective at keeping inflation under control in the long run. It would 
further weaken, if not kill, the United States' reputation as the world's 
safest place to keep cash.

   On Wall Street, several Big Tech stocks helped lead indexes lower ahead of 
their latest earnings reports coming later this week.

   Tesla sank 4.4%, for example. The electric vehicle's stock came into Monday 
roughly 50% below its record set in December on criticism that its stock price 
had gone too high and that its brand has become too entwined with Elon Musk, 
who's leading the U.S. government's efforts to cut spending.

   On the winning side of Wall Street were Discover Financial Services and 
Capital One Financial, which jumped after the U.S. government approved their 
proposed merger.

   Discover rallied 4.6%, and Capital One rose 2.6%.

   In the bond market, shorter-term Treasury yields fell as investors keep 
alive hopes that the Fed may cut its main overnight interest rate later this 
year in order to support the economy. But longer-term yields rose as doubts 
continue to rise about the United States' standing in the global economy.

   The yield on the 10-year Treasury rose to 4.38% from 4.34% at the end of 
last week and from just about 4% earlier this month. That's a substantial move 
for the bond market.

   The U.S. dollar's value, meanwhile, fell against the euro, Japanese yen, the 
Swiss franc and other currencies.

   In stock markets abroad, Tokyo's Nikkei 225 fell 1.3%. Indexes fared better 
in Seoul, where stocks rose 0.2%, and in Shanghai, which saw a 0.4% gain.

   ___

   AP Business Writer Elaine Kurtenbach contributed.

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