As Wall Street responded to the Trump administration launching a criminal investigation against Fed Chair Jerome Powell, US stock futures fell on Sunday night.
Futures for the S&P 500 (ES=F) and Dow Jones Industrial Average (YM=F) both saw a 0.5% decline. Nasdaq 100 linked contracts (NQ=F) fell 0.8%.
After Federal Reserve chair Jerome Powell announced in a statement late on Sunday night that the US central bank had been subpoenaed by the Department of Justice, investors were shaken.
Powell said in an unusual video speech that "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 asserted that the action was an outright assault on interest rate policies that "serve the public" as opposed to "following the preferences of the President."
The turbulent beginning comes after a successful end to the previous week, when equities reached new all-time highs. The Dow (^DJI) and the S&P 500 (^GSPC) both ended Friday at record highs, continuing a surge that saw the S&P 500 rise more than 1% for the week. With increases of 2.3% and 1.9%, respectively, the Dow and Nasdaq Composite (^IXIC) saw even greater gains.
As markets prepare for the most recent consumer inflation report, which is coming on Tuesday, Trump's conflict with the Fed chair has significantly intensified.
The announcement follows Friday's December jobs data, which revealed that the labor market was still cooling but did not indicate a significant slowdown in the economy.
When considered collectively, the data has strengthened predictions that the Federal Reserve will hold off for the time being, with CME FedWatch providing a 95% chance that rates will remain unchanged.
Geopolitical developments continue to be unpredictable outside of the economic calendar. According to reports, President Trump is increasing pressure on Cuba on Venezuelan oil exports and considering possible measures including Iran.
Trump reiterated his contentious remarks over Greenland late last week, stating that the US might seek control of the Danish territory "whether they like it or not."
Earnings season and important inflation data are the first significant triggers of 2026 that investors are now focusing on. The largest banks on Wall Street, including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS), and Morgan Stanley (MS), are scheduled to report in the next few days.
