Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

The Federal Reserve is not pleasing President Trump with its policy on interest rate increases

The Federal Reserve can likely stop raising U.S. interest rates once they reach about 3 per cent, as long as inflation remains around 2 per cent and the economy is doing well, Chicago Federal Reserve President Charles Evans suggested on Wednesday. "It's so tight. I think the Fed has gone insane", Trump told reporters as he arrived for a campaign rally ahead of the U.S. mid-term elections. "The Fed has gone insane", Trump said. But he downplayed the first major drop in months, saying it was a "correction that we've been waiting for".

"I really disagree with what the Fed is doing", Trump said.

Tech and luxury stocks have been among those to feel the worst pain in the sell-off.

The 10-year Treasury yield rose to 3.22 percent from 3.20 percent late Tuesday after earlier touching 3.24 percent. "I just don't think it's necessary to go as fast".

The broad USA stock market sell-off Wednesday took the S&P 500 to the lowest in three months, the Dow Jones Industrial Average plunged as much as 836 points and the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years.

China Mobile shares fell 3.7%, insurance group Ping An dropped 4.1% and China Construction Bank lodged a slide of 3.2%.

She said in addition to rising interest rates, investors also fear that company profit margins will be squeezed by rising costs, including the price of oil.

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Investors are leaning into safer stocks with steady dividends - utilities and consumer staples - and pulling out of the higher-paying, higher-risk stocks as other guideposts of growth, like the communication sector, tumbled.

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong USA economy and solid corporate earnings.

Bourses in Paris and Frankfurt both lost more than two percent, while London fell 1.3 percent.

The President said this week he prefers lower interest rates but added he would not speak directly to his Fed chairman appointee Jerome Powell, preferring instead to remain hands-off.

In September, the Fed raised interest rates by 25 basis points for the third time in 2018, raising the target range for its benchmark rate to 2%-2.25%.

"It's shifting the tectonic plates", said Jack Ablin, chief investment officer at Cresset Wealth Advisors.

As for whether Wednesday's overall market drop could signal an end to broader economic growth, Benedict says there won't necessarily be long-term affects if the markets can stabilize before the losses grow more severe. The problem I have is with the Fed. The Nasdaq fell 315 points, or 4.1 percent, to 7,422.

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