Wall Street and the dollar sink again as Trump’s pressure on Fed erodes appeal of US assets, sending S&P 500 down 2.4%

NEW YORK (AP) - U.S. stocks tumbled as investors worldwide get more skeptical about U.S. investments because of President Donald Trump's trade war and his criticism of the Federal Reserve, which are shaking up the traditional order.

The S&P 500 fell 2.4% Monday and was 16% below its record set two months ago. The Dow Jones Industrial Average dropped 2.5%, and the Nasdaq composite sank 2.6%. Big Tech stocks led the way lower ahead of earnings reports coming this week from Tesla and others. Perhaps of more concern, U.S. government bonds and the value of the U.S. dollar also sank.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

NEW YORK (AP) - U.S. stocks are tumbling Monday as investors worldwide get more skeptical about U.S. investments because of President Donald Trump's trade war and his criticism of the Federal Reserve, which are shaking the traditional order.

The S&P 500 sank 3.4% in another wipeout. That yanked the index that’s at the center of many 401(k) accounts nearly 17% below its record set two months ago.

The Dow Jones Industrial Average was down 1,273 points, or 3.3%, with an hour remaining in trading. Tesla and other Big Tech stocks dropped to some of the sharpest losses, which dragged the Nasdaq composite down a market-leading 3.6%.

Perhaps more worryingly, U.S. government bonds and the value of the U.S. dollar also sank as a retreat continued from U.S. markets. It's an unusual move because they’ve historically strengthened during past episodes of nervousness. This time around, though, 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 global trade, even as economists and investors continue to say his stiff proposed tariffs could cause a recession if they're not rolled back. U.S. talks last week with Japan have so far failed to reach a deal that could lower tariffs and protect the economy, and they’re seen as a "test case," according to Thierry Wizman, a strategist at Macquarie.

"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," likewise in all caps.

Trump has recently focused more on China, the world's second-largest economy, which has been keeping up with the rhetoric itself. 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 others try to negotiate agreements.

"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 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 slowing nearly all the way down to its 2% goal from more than 9% three years ago.

Trump talked again on Monday about a slowdown for the U.S. economy that could be coming unless "Mr. Too Late, a major loser, lowers interest rates, NOW."

A move by Trump to fire Powell would likely send a tremendous bolt of fear through financial markets. While Wall Street loves lower interest rates, in large part because they boost stock prices, the bigger worry would be that a less independent Fed would be less effective at keeping inflation under control in the long run. Such a move could further weaken, if not kill, the United States' reputation as the world's safest place to keep cash.

All the uncertainty striking pillars at the center of global financial markets means some investors say they're having to rethink the fundamentals of how to invest.

"We can no longer extrapolate from past trends or rely on long-term assumptions to anchor portfolios,” strategists at BlackRock Investment Institute said in a report. "The distinction between tactical and strategic asset allocation is blurred. Instead, we need to constantly reassess the long-term trajectory and be dynamic with asset allocation as we learn more about the future state of the global system."

That in turn could push investors outside the United States to keep more of their money in their home markets, according to the strategists led by Jean Boivin.

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

Tesla sank 7.1%, 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.

Nvidia fell 5.9% and was on track for a third straight drop after disclosing that new U.S. export limits on chips to China could hurt its first-quarter results by $5.5 billion. It was the single heaviest weight on the S&P 500. A 3.2% drop for Apple, 3.1% fall for Microsoft and 4.1% slide for Amazon were close behind.

It was another wipeout on Wall Street, and 97% of the stocks within the S&P 500 were falling.

Among the few gainers was Discover Financial Services, which climbed after the U.S. government approved its proposed merger with Capital One Financial.

Discover rose 3.1%, while Capital One added 1%.

Gold also climbed to burnish its reputation as a safe-haven investment, unlike some others.

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 with doubts about the United States’ standing in the global economy because of Trump’s moves. The yield on the 10-year Treasury climbed to 4.41%, up 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.