S&P futures declined on Monday following the announcement of a criminal investigation by the Department of Justice into Federal Reserve Chair Jerome Powell, signaling a potential intensification of President Donald Trump’s efforts to exert influence over the central bank. Futures on the Dow Jones Industrial Average experienced a decline of 347 points, representing a decrease of 0.7%. S&P 500 futures declined by 0.6%, while Nasdaq-100 futures fell by 0.8%, as investors reduced their risk exposure amid the escalating tensions in the standoff between Trump and the Fed. Trump’s proposal to limit credit card interest rates to 10% for a year was contributing to some market unease at the beginning of the week. Critics express concern that Trump’s strategy to enhance affordability may inadvertently lead to tighter lending conditions, adversely affecting consumers and diminishing bank profitability.

In the early trading session, bank stocks experienced significant declines, with Citigroup witnessing a 4% drop in the premarket. JPMorgan and Bank of America experienced declines exceeding 2%. Capital One shares experienced a decline of 11% during the early trading session. Powell, in an atypical direct video address on Sunday evening, confirmed that federal prosecutors have initiated a criminal investigation concerning his testimony before the Senate Banking Committee regarding the renovation of Federal Reserve office buildings. Powell stated that the investigation represents yet another effort by Trump to sway the central bank’s monetary policy, asserting that he would not yield to such pressure. His tenure as chair concludes in May.

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead, monetary policy will be directed by political pressure or intimidation,” stated Powell in the announcement. Fear gauge increased in early trading, indicating that traders sought additional protection in the options market following the announcement of the Powell probe. “The market has encountered this situation previously and has shown a negative response.” Jay Woods stated “It’s not about Powell at this point, it’s about the independence of the Fed. Thus, when news of this nature emerges, the immediate response tends to be a sell-off.” The stock market in 2025 exhibited a notable disregard for Trump’s efforts to influence the Federal Reserve, as the central bank proceeded to implement three rate cuts in response to stabilizing inflation. However, the Federal Reserve is widely anticipated to refrain from implementing additional cuts during its upcoming meeting later this month, as it seeks to assess the developments in inflation and the economy as the new year progresses.

Trump has expressed a desire for the Federal Reserve to persist in lowering interest rates. Gold futures, perceived as a safeguard against the erosion of Federal Reserve autonomy, surged by 2%. Concerns among investors center on the possibility that a politically influenced Federal Reserve may exhibit reluctance in addressing the resurgence of inflation. “This is clearly a risk-off sentiment.” Krishna Guha stated “We expect the dollar, bonds, and stocks to all fall in Monday trading in a sell-America trade similar to that in April last year at the peak of the tariff shock and earlier threat to Powell’s position as Fed chair, with global investors applying a higher risk premium to U.S. assets.” Guha added “Gold and other safe havens should experience a rally.” The debate surrounding central bank independence is intensifying as the U.S. equity market reaches unprecedented levels. The S&P 500 and the 30-stock Dow concluded Friday’s session at new highs, marking the end of a successful week for the primary indices. Market participants are gearing up for the commencement of earnings season, as prominent banks are poised to disclose their financial results in the forthcoming days. JPMorgan Chase, Bank of America, Morgan Stanley, and Goldman Sachs are all set to disclose their quarterly results, providing investors with new perspectives on the state of consumer spending, deal-making dynamics, and trading revenues.