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U.S. stock index futures fell sharply on Monday, as investors grappled with mounting uncertainty over the Federal Reserve’s independence after the Justice Department opened a criminal investigation into Chair Jerome Powell’s testimony regarding cost overruns on a $2.5 billion renovation of the Fed’s Washington headquarters.
By 05:50 ET 10:50 GMT, Dow Jones Futures were down 360 points, or 0.7%, S&P 500 Futures fell 46 points, or 0.7%, and Nasdaq 100 Futures slipped 220 points, or 0.9%.
The pullback follows a strong end to last week on Wall Street. Both the S&P 500 and the Dow Jones Industrial Average closed at record highs on Friday, capping a winning week for U.S. equities. The S&P 500 gained more than 1% over the week, while the Dow and the Nasdaq Composite rose 2.3% and 1.9%, respectively.
Powell Under Intensifying Political Pressure
Powell confirmed late Sunday that federal prosecutors have opened a criminal investigation related to his testimony before the Senate Banking Committee on the Fed’s renovation project. He suggested that the move was politically motivated, tied to the Trump administration’s repeated demands for aggressive interest rate cuts.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “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.”
The remarks marked Powell’s most direct response yet to escalating pressure on the central bank. President Donald Trump has repeatedly called for at least two percentage points of rate cuts, while the Fed delivered a total of 0.75 percentage points of easing in 2025, citing sticky inflation and uncertainty stemming from trade policy.
The confrontation comes with Powell’s term set to expire in May. Trump said last week that he is close to nominating Powell’s successor, further heightening concerns that political considerations could begin to shape monetary policy.
Analysts at ING said Powell had “explicitly characterised this as an attack on the Fed’s independence,” noting that markets appeared to agree. They pointed to the simultaneous declines in the dollar, equities and Treasuries as echoing the “sell America” sentiment seen earlier last year.
December CPI in Focus
Attention now turns to a packed week of economic data, led by Tuesday’s release of the December consumer price index. Headline inflation is expected to remain steady, while core CPI is forecast to edge higher.
The data follows a softer-than-expected November inflation reading, which analysts said may have been distorted by disruptions tied to a late-2025 government shutdown. Markets are widely pricing in no change to interest rates at the Fed’s January meeting, after policymakers signaled a higher bar for further cuts this year.
Beyond CPI, investors will parse producer price data, retail sales figures and comments from several Federal Reserve officials for clues on the policy outlook.
Banks to Kick Off Earnings Season
The fourth-quarter earnings season begins in earnest this week, with major U.S. banks leading the way. JPMorgan Chase and Bank of New York Mellon are set to report on Tuesday, followed by Bank of America, Wells Fargo and Citigroup on Wednesday. Morgan Stanley, Goldman Sachs and BlackRock will report later in the week.
These results are expected to shed light on how corporate America navigated the economic disruptions caused by a government shutdown and heightened geopolitical tensions in the final quarter of 2025.
Ahead of earnings, financial stocks came under pressure after Trump called for a one-year cap on credit card interest rates. In a weekend post, he proposed a 10% ceiling on annual percentage rates starting January 20, arguing that consumers are being “ripped off” by rates in the 20% to 30% range.
The proposal revived concerns over regulatory risk for the sector, adding another layer of uncertainty at a moment when markets are already sensitive to political interference in economic policy.
