Stock Market Today: Dow Slips, S&P 500 and Nasdaq Waver as DOJ Probe of Fed Chair Rattles Markets
U.S. stocks were choppy on Monday as the market stepped back from record highs. Investors grappled with renewed concerns over Federal Reserve independence after the Justice Department opened a criminal investigation into Chair Jerome Powell. What began as a steep pullback early in the session softened by midday, but the tone remained defensive as political risk re-entered the market narrative.
The Dow Jones Industrial Average slipped slightly, weighed down by losses in financial stocks, while the S&P 500 and Nasdaq Composite hovered near flatline after paring earlier declines. Investors showed little appetite to add risk following last week’s rally, with many opting to wait for clarity on policy, inflation, and earnings before making fresh bets.
Market Movers:
- Capital One (COF) -6.4%: Shares fell sharply after President Trump warned credit card issuers they could be “in violation of the law” if borrowing costs are not capped at 10%. The comments reignited fears of regulatory intervention across consumer finance, sending ripples through the broader banking sector ahead of earnings season.
- Gold futures (GC=F) +3.0%: Gold surged to fresh record highs as investors sought protection from political and monetary uncertainty. Demand was fueled by concerns that pressure on the Fed could undermine confidence in U.S. institutions, pushing capital toward traditional safe havens.
- Intel (INTC) +7.8%: Intel rallied after President Trump publicly praised CEO Lip-Bu Tan and highlighted the federal government’s equity stake in the chipmaker. The move added to optimism around Intel’s turnaround narrative following recent CES product launches and renewed emphasis on domestic semiconductor manufacturing.
- Abercrombie & Fitch (ANF) -15.3%: The apparel retailer sank after issuing a disappointing update on holiday-quarter performance, reviving concerns about discretionary spending. Weak guidance dragged down other retail names, reinforcing caution around consumer-facing stocks.
DOJ Probe Reignites Fears Over Fed Independence
Markets were rattled after Powell confirmed that the Justice Department has subpoenaed the Federal Reserve in connection with testimony related to building renovations, raising the specter of criminal charges. In a rare and forceful response, Powell framed the move as an escalation in political pressure tied to the Fed’s refusal to align interest-rate policy with White House demands.
Investors view the episode as a potentially destabilizing moment for monetary policy credibility. Even the perception of political interference risks pushing inflation expectations higher over time, complicating the Fed’s ability to guide markets. Those concerns were immediately reflected in a weaker dollar and a sharp bid for precious metals, even as equities avoided a deeper selloff.
Financials Under Pressure as Policy Risk Grows
Bank and financial services stocks broadly underperformed after Trump’s comments targeting credit card interest rates added a new layer of uncertainty ahead of earnings. Investors are increasingly wary that populist rhetoric could translate into concrete policy proposals, potentially squeezing margins at a time when lending growth is already slowing.
Treasury yields edged lower as traders leaned defensive, reinforcing expectations that the Federal Reserve will remain on hold in the near term. Last week’s jobs report showed continued cooling in the labor market without signaling a sharp downturn, leaving markets sensitive to any developments that could further disrupt the policy outlook.
Geopolitics and Commodities Add to Volatility
Geopolitical risks remained in focus as investors monitored unrest in Iran and ongoing U.S. involvement in Venezuela. Oil prices drifted lower as traders weighed the possibility of supply disruptions against signs of softening global demand, keeping energy stocks mixed. Meanwhile, strength in gold and silver underscored how quickly sentiment can shift when confidence in institutions is questioned. Commodity markets are increasingly reflecting not just economic fundamentals, but political risk as well.
Looking Ahead
Focus now shifts to a packed stretch of catalysts that could set the tone for markets in the weeks ahead, starting with December inflation data and the kickoff of earnings season led by major U.S. banks. CPI results will be closely watched for confirmation that disinflation remains intact, especially as markets reassess the Fed’s rate path amid rising political pressure on monetary policy. At the same time, bank earnings and guidance should offer fresh insight into consumer credit health, loan demand, and how executives are navigating an increasingly uncertain regulatory backdrop. With geopolitical tensions still elevated and questions lingering around Fed independence, markets appear poised for continued volatility as investors weigh whether recent gains can be sustained or face near-term tests.
