US stocks slid on Monday, pulling back from records amid concerns over Federal Reserve independence after US prosecutors opened a criminal investigation into Chair Jerome Powell.
The Dow Jones Industrial Average (^DJI) sank 0.8%, while the S&P 500 (^GSPC) fell 0.3%. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) dropped around 0.2% on the heels of all-time closing highs for Wall Street stocks.
Rattled markets are turning their backs on US assets after Powell said the Justice Department has subpoenaed the Fed, threatening criminal charges over his testimony on building renovations. In a strongly worded statement, Powell said the action is an escalation of President Trump’s campaign to pressure the Fed into cutting interest rates.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell wrote, describing as “pretexts” the concerns cited in the subpoenas.
The DOJ moves and Powell’s sharp response promise to turn an already high-stakes White House-Fed struggle into open war. The developments have reinforced concerns over political interference in monetary policy — worries that helped send gold (GC=F) to fresh record peaks and the dollar (DX-Y.NYB) to its lowest level in three weeks.
In corporates, bank and other financial services stocks slumped thanks to a warning to credit card issuers from Trump. Lenders will be “in violation of the law” if they don’t cap interest rates at 10%, he told reporters on Sunday. Shares of Capital One (COF) slid 6% to lead early trading losses. Citi (C) and JPMorgan (JPM) also fell in a downbeat start to a week when big US banks will kick off earnings season.
The unsettled mood comes as investors get ready for this week’s updates on inflation in December, with the Consumer Price Index (CPI) reading due on Tuesday. Markets were overwhelmingly betting on no rate cut from the Fed this month after Friday’s December jobs report showed continued cooling in the labor market without signaling a sharp economic slowdown.
Meanwhile, Wall Street kept a watchful eye on Iran, as public unrest edges the country toward revolution and Trump says the US is “looking” at military action as a response to a crackdown on protests. Oil prices retreated as investors weighed the potential impact on crude supply.
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US stocks slid on Monday at the market open, pulling back from last week’s rally to all-time highs as investor concerns mounted over Federal Reserve independence amid the Trump administration’s launch of a criminal investigation into Chair Jerome Powell.
The Dow Jones Industrial Average (^DJI) sank 0.8%, while the S&P 500 (^GSPC) fell 0.3%. The tech-heavy Nasdaq Composite (^IXIC) dropped around 0.2%.
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Tempus AI (TEM), an $11 billion artificial intelligence company, jumped 12% in premarket trading on Monday after disclosing it reached a record contract value of above $1.1 billion. The preliminary fourth quarter results also suggested a net revenue retention rate of 126% in 2025, the company said.
Tempus AI is a healthcare tech company that provides AI services and data to pharma companies, including players like AstraZeneca (AZN), GlaxoSmithKline (GLAXO.NS), Bristol Myers Squibb (BMY), Pfizer (PFE), Novartis (NVS), and Merck (MRK), among others.
The stock was the top trending ticker early on Monday.
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Credit card stocks like Synchrony (SYF) and Capital One (COF) dropped as much as 10% in premarket trading on Monday after President Trump proposed limiting credit card fees to 10% on Friday. It’s not clear how Trump plans to cap card fees without Congress’s help in passing legislation.
The move, which Trump campaigned on in 2024, drew responses from bank analysts and trade groups on Monday. Yahoo Finance’s David Hollerith reports:
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“Sell America” sentiment rippled through markets on Monday after the Trump administration escalated its attacks on the Fed. The DOJ’s threat of criminal charges stoked concerns over the central bank’s autonomy in setting interest rates.
Bloomberg reports:
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Yahoo Finance’s Jake Conley and Myles Udland lay out the key events in the week ahead:
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Alibaba’s (BABA) US shares rose 4% during premarket trading on Monday after China announced it will be launching a probe into competition practices in the food-delivery sector, increasing hopes that authorities will curb subsidy-driven price wars.
Walmart (WMT) stock rose 3% before the bell on Monday. The retailer will join the Nasdaq 100 Index (^NDX), replacing AstraZeneca Plc (AZN), Nasdaq Global Indexes said Friday.
Affirm Holdings (AFRM) stock climbed 4% before the bell on Monday. The Buy Now Pay Later company received some attention from Citi (C) analysts on Friday, who reiterated their Buy ratings on Affirm, alongside Klarna (KLAR) and Block (XYZ).
American Airlines’ (AAL) stock fell 3% during premarket trading. In a report released on Friday, analysts at Barclays (BCS) maintained a Hold rating on American Airlines, with a price target of $16.00.
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Sun Country Airlines (SNCY) stock rose 17% before the bell on Monday after Allegiant Travel (ALGT) agreed to purchase the budget airline in a cash and stock deal valuing Sun Country at about $1.5 billion, including $400 million in debt.
MT Newswire reports:
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Credit card companies, Capital One (COF) and American Express (AXP) stocks fell 8% and 4%, respectively, during premarket trading on Monday following President Trump’s comments that credit-card lenders would be in “violation of the law” if they don’t cap interest rates at 10% for one year.
Trump spoke to reporters on Air Force One as he returned to Washington from Florida and reinforced his demand that credit card companies should lower interest rates and keep them at 10% for one year. Trump has set a January 20 deadline for compliance.
Bloomberg News reports:
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Bloomberg reports:
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Reuters sourced the following comments from analysts and investors about the Trump administration’s move against Federal Reserve chair Jerome Powell:
VISHNU VARATHAN, HEAD OF MACRO RESEARCH, ASIA EX-JAPAN, MIZUHO, SINGAPORE
“The Fed independence question is now well and alive and maybe subject to re-evaluation every few meetings.
“I think I’m still not sure how sustained and adversarial the attack on the Fed might be. There could be a scenario where Trump could still appoint someone with some credibility and allow this person to run the show – so that’s probably why markets aren’t panicking as yet.”
ANDREW LILLEY, CHIEF RATES STRATEGIST AT BARRENJOEY, SYDNEY
“Trump is pulling at the loose threads of central bank independence. I don’t even believe that he expects that Chair Powell will be charged… The only reason that he’s taking these steps is that he knows that he’s not going to take control of the Fed, so he wants to exert as much undue pressure as he can.
“It is not good. Don’t get me wrong, but I think it will amount to nothing. Investors won’t be happy about it, but it shows actually Trump has no other levers to pull. The cash rate will stay what the majority of the FOMC wants them to be.”
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Bloomberg reports:
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Bloomberg reports:
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Associated Press reports:
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