US stock futures dropped Sunday night as Wall Street reacted to the Trump administration opening a criminal investigation into Fed Chair Jerome Powell.
Dow Jones Industrial Average futures (YM=F) and futures on the S&P 500 (ES=F) fell 0.5%. Contracts tied to the Nasdaq 100 (NQ=F) slumped 0.8%.
Investors were rattled late Sunday evening after Federal Reserve chair Jerome Powell released a statement revealing that the Department of Justice had subpoenaed the US central bank.
In an uncharacteristic video address, Powell stated “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 claimed that the move was a direct attack for the setting of interest rates that “serve the public” rather than “following the preferences of the President.”
The tumultuous start follows a strong finish to last week, when stocks climbed to fresh record highs. Both the S&P 500 (^GSPC) and the Dow (^DJI) closed Friday at new peaks, extending a rally that pushed the S&P 500 up more than 1% for the week. The Dow and Nasdaq Composite (^IXIC) posted even stronger gains, rising 2.3% and 1.9%, respectively.
The significant escalation in Trump’s feud with the Fed chair comes as markets are bracing for the latest consumer inflation report, due Tuesday. The release comes on the heels of Friday’s December jobs report, which showed continued cooling in the labor market without signaling a sharp economic slowdown.
Taken together, the data has reinforced expectations that the Federal Reserve will remain on hold for now, with CME FedWatch offering a 95% probability of rates staying the same.
Beyond the economic calendar, geopolitical developments remain a wildcard. President Trump is reportedly weighing potential action involving Iran, while also escalating 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).
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