US stock futures fell on Sunday night as Wall Street reacted to the Trump administration opening a criminal investigation into Fed Chairman Jerome Powell.
Dow Jones Industrial Average futures (YM=F) fell 0.5% while futures on the S&P 500 (ES=F) fell 0.6%. Contracts tied to the Nasdaq 100 (NQ=F) fell 0.9%.
Investors were spooked on Sunday evening after Federal Reserve Chairman Jerome Powell released a statement revealing the Justice Department’s submission to the U.S. central bank.
In an impromptu video address, Powell said “the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening criminal charges related to my testimony before the Senate Banking Committee last June.”
Powell claimed the move was a direct attack on interest rate setting that “serves the public” rather than “following the president’s priorities.”
The choppy start follows last week’s strong finish, when stocks climbed to fresh record highs. Both the S&P 500 (^GSPC) and Dow (^DJI) closed Friday at new highs, extending a rally that pushed the S&P 500 up more than 1% for the week. The Dow and Nasdaq Composite (^IXIC) posted stronger gains, rising 2.3% and 1.9%, respectively.
Trump’s spat with the Fed chair has escalated significantly as markets brace for the latest consumer inflation report, due on 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 bolstered expectations that the Federal Reserve will remain on hold for now, with CME FedWatch giving a 95% chance that rates will remain unchanged.
Beyond the economic calendar, geopolitical developments remain a wildcard. President Trump is increasing pressure on Cuba over Venezuelan oil shipments and weighing possible action to involve Iran. Late last week, Trump also renewed controversial comments about Greenland, saying the US could control 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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Analyst reactions to DOJ investigation into Powell
Reuters sourced the following comments from analysts and investors about the Trump administration’s move against Federal Reserve Chairman Jerome Powell:
Vishnu Varathan, Head of Macro Research, Asia Ex-Japan, Mizuho, Singapore
“The Fed independence question is now well and alive and subject to re-evaluation perhaps every few meetings.
“I think I still don’t know how sustained and adversarial the attack on the Fed can be. There could be a scenario where Trump still appoints someone with some credibility and allows this person to run the show — so that’s probably why the markets aren’t panicking yet.”
Andrew Lilly, Chief Rate Strategist at Barrenzoi, Sydney
“Trump is pulling at the loose threads of central bank independence. I don’t even believe he expects Chair Powell to be charged … 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 apply as much unnecessary pressure as possible.
“It’s not good. Don’t get me wrong, but I think it’s going to be nothing. Investors won’t be happy about it, but it really shows that Trump doesn’t have any other levers to pull. The cash rate will stay where the majority of the FOMC wants them.”
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Gold hits record high as Fed independence comes into focus
Bloomberg reports:
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Jerome Powell announced that the DOJ had submitted to the Federal Reserve
Bloomberg reports:
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Trump says CEO comments may keep ExxonMobil out of Venezuela due to personal feelings
The Associated Press reports:
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