President Trump blames 'loco' Federal Reserve for October's big stock drop

US stocks have plunged to their worst loss in eight months

The broad US 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. The Nasdaq dropped more than 4% in the worst percentage decline since June 2016.

With the stock market's huge losses in the past week - the largest decline since February - some economists blamed President Trump's trade conflict with China.

Markets in Paris and Frankfurt both lost more than 2%, while London fell 1.3%. The yield on the 10-year Treasury note climbed above 3.23 percent at one point on October 10, up from 3.05 percent a week earlier, and is close to its highest level in seven years. The average yield on the 100 largest taxable USA money-market mutual funds averaged 1.95 percent this week, according to Crane Data. As a result, bond yields rose (and bond prices fell, since they move inversely to yields).

The Federal Reserve sets baseline interest rates for lending standards, which can have a massive effect on whether businesses expand or contract. And there are lingering concerns about the unresolved trade dispute between the USA and China.

Hundreds of companies are due to provide investors with updated earnings forecasts in coming weeks.

Dallas Fed President Robert Kaplan said he still favors the central bank raising short-term interest rates three more times before deciding whether more increases will be necessary to keep the economy on an even keel.

"I'm paying interest at a high rate because of our Fed", he added, referring to the cost of servicing the USA deficit.

Finally, investors might want to look at how the Fed is thinking about the assumed relationship between low unemployment, rising wages, inflation and monetary policy. He didn't say anything remotely like that, ' he said on CNBC. "I mean, I don't know what their problem is but they're raising interest rates and it's ridiculous".

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"Later, White House Press Secretary Sarah Sanders said the fundamentals and the future of the United States economy remain incredibly strong".

Raising interest rates was justified 'for those economies that are showing much improved growth, inflation that is picking up.unemployment that is extremely low, ' Lagarde told a press briefing in Bali, Indonesia where the International Monetary Fund is holding its annual meeting. "All bets are off", warned Stephen Innes, head of trading at OANDA, adding that the markets "are fraught with peril".

Trump's latest criticism of the Federal Reserve gave investors another headache.

Trump has said the Fed "has gone insane", and that the Fed was 'going loco' about rising rates.

Trump has been publicly criticizing the Fed since July for interest-rate increases and declared he was "not happy" in September when the central bank raised rates for the third time this year.

Trump has said in the past that he was "not thrilled" with the rate hikes and reportedly told donors at a fundraiser that Fed Chairman Jerome Powell had not been the "cheap money" banker he hoped for.

Even chief Trump economic adviser Larry Kudlow, qualifying the president's opinion of Fed chair Jerome Powell's Fed, said he thought the central bank was "on target", and that its ability to raise rates was a sign of "economic health, that is something to be welcomed and not feared".

Trump on Thursday also indicated that the Fed's policies were harming him personally.

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