Dow, S&P 500, Nasdaq futures slip on Fed threat as Trump’s DOJ has criminal probe

Dow, S&P 500, Nasdaq futures slip on Fed threat as Trump’s DOJ has criminal probe

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U.S. stock futures added to losses early Monday amid concerns about the Federal Reserve’s independence after Chairman Jerome Powell said the Trump administration threatened him with criminal indictment.

Dow Jones Industrial Average (YM=F) futures fell 0.6%, while those on the S&P 500 (ES=F) fell about 0.8%. Contracts on the Nasdaq 100 (NQ=F) led the way lower, falling 1.1 percent following record highs on Wall Street.

Investors were jittery late Sunday after Powell released a statement disclosing that the Justice Department had subpoenaed the U.S. central bank.

In a rare video, Powell said that “the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.”

Powell suggested the move was a direct attack on the Fed for setting interest rates that “serve the public” rather than “following the president’s preferences.”

The significant escalation in the conflict between Trump and the Fed chairman comes as markets prepare for the latest consumer inflation report due out on Tuesday. The announcement follows Friday’s December jobs report, which showed a continued cooling in the labor market without signaling a sharp slowdown in the economy.

Taken together, the data reinforced expectations that the Federal Reserve will remain on hold for now, with CME FedWatch giving a 95% probability that rates will remain unchanged.

Beyond the economic calendar, geopolitical developments remain a wildcard. Trump is reportedly weighing potential actions involving Iran as he steps up pressure on Cuba over Venezuelan oil shipments. Late last week, Trump also renewed controversial comments about Greenland, saying the US could pursue control of the Danish territory “whether they like it or not”.

Investors are now turning their attention to the first major catalysts of 2026: earnings season and key inflation data. Several of Wall Street’s biggest banks are set to report in the coming days, including JPMorgan Chase ( JPM ), Bank of America ( BAC ), Wells Fargo ( WFC ), Citigroup ( C ), Goldman Sachs ( GS ), and Morgan Stanley ( MS ).

LIVE 5 updates

  • Dollar falls most in 3 weeks as Fed receives subpoenas

    Bloomberg reports:

    The dollar (DX-Y.NYB) fell the most in nearly three weeks as the Federal Reserve faced grand jury subpoenas from the Justice Department, rekindling concerns about political interference in monetary policy.

    The Bloomberg Dollar Spot Index fell 0.3% on Monday, set for its biggest drop since Dec. 23. That’s after Fed Chairman Jerome Powell revealed the central bank had received grand jury subpoenas, threatening criminal charges related to his testimony in June about the headquarters renovation.

    … Rising tensions are fueling anxiety about central bank autonomy, potentially reversing the bullish sentiment on options seen earlier in the year. The dollar opened 2026 with a strong bias, especially against the euro, a distinct change from December’s dynamics. This leaves the short-term positioning vulnerable to further recovery on the back of the latest developments.

    The dollar’s position as the world’s reserve currency depends on institutional confidence, Nigel Green, chief executive of financial advisory firm deVere Group, wrote in a note. “History teaches us that countries that allow political leaders to dominate central banks pay a high economic price.”

    Read more here.

  • Analysts’ reactions to the DOJ investigation into Powell

    Reuters provided the following comments from analysts and investors about the Trump administration’s move against Federal Reserve Chairman Jerome Powell:

    VISHNU VARATHAN, HEAD ⁠MACRO RESEARCH, ASIA EX-JAPAN, ‌MIZUHO, SINGAPORE

    “The question of Fed independence is now well and alive and may be subject to reassessment every few meetings.

    “I think I’m still not sure how sustained and adversarial the attack on the Fed could be. There could be a scenario where Trump could still appoint someone with some credibility and let that person run the show — so that’s probably why the markets aren’t panicking yet.”

    ANDREW LILLEY, CHIEF RATE STRATEGIST AT BARRENJOEY, SYDNEY

    “Trump is pulling the strings of central bank independence. I don’t even think he expects Chairman Powell to be impeached… The only reason he’s taking these steps is because he knows he’s not going to take control of the Fed, so he wants to put as much undue pressure on it as possible.

    “It’s not good. Don’t get me wrong, but I think it won’t amount to anything. Investors won’t be happy about it, but it shows that Trump has no other levers to pull. The cash rate will remain what most of the FOMC wants it to be.”

  • Gold hits record high as Fed independence comes into focus

    Bloomberg reports:

    Read more here.

  • Jerome Powell announces that DOJ has subpoenaed the Federal Reserve

    Bloomberg reports:

    Read more here.

  • Trump says he may keep ExxonMobil out of Venezuela because of personal feelings about CEO’s comments

    The Associated Press reports:

    Read more here.

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