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Dow, S&P 500, Nasdaq futures slide on threat to Fed as Trump’s DOJ eyes criminal probe

Rebecca French

U.S. stock futures fell further in early trade on Monday after Federal Reserve Chairman Jerome Powell said the Trump administration was threatening to criminally prosecute him, raising concerns about the central bank’s independence.

Dow Jones Industrial Average futures (YM=F) fell 0.6% and S&P 500 futures (ES=F) fell about 0.8%. Contracts on the tech-heavy Nasdaq 100 Index (NQ=F) led losses, falling 1.1% after Wall Street stocks hit a new closing high.

On Sunday evening, Powell rattled investors by issuing a statement revealing that the Justice Department had subpoenaed the U.S. central bank.

“The Department of Justice issued a grand jury subpoena to the Federal Reserve, threatening criminal prosecution for my testimony before the Senate Banking Committee last June,” Powell said in a rare video.

Powell said the move was a direct attack on the Fed setting interest rates to “serve the public” rather than “follow the president’s preferences.”

The sharp escalation in Trump’s feud with the Fed chairman comes as markets prepare for the latest consumer inflation report due on Tuesday. The report comes on the heels of Friday’s December jobs report, which showed the labor market continues to cool but stopped short of signaling a sharp slowdown in the economy.

Taken together, the data reinforce expectations that the Fed will keep rates on hold for now, with CME FedWatch giving a 95% chance of keeping rates unchanged.

Beyond the economic calendar, geopolitical developments remain an uncertain factor. Trump is reportedly considering potential actions involving Iran while also increasing pressure on Cuba over Venezuelan oil shipments. Late last week, Trump also made another controversial statement about Greenland, saying the United States could pursue control of the Danish territory “whether they like it or not.”

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Investors are now turning their attention to the first major catalyst in 2026: earnings season and key inflation data. Several of Wall Street’s biggest banks will report earnings in the coming days, including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS).

live 5 updates

  • Dollar drops the most in three weeks as Fed receives subpoena

    Bloomberg reports:

    The U.S. dollar (DX-Y.NYB) fell the most in nearly three weeks as the Federal Reserve faces a Justice Department grand jury subpoena, reigniting concerns about political interference in monetary policy.

    The Bloomberg Dollar Spot Index fell 0.3% on Monday, its biggest drop since December 23. Earlier, Federal Reserve Chairman Jerome Powell revealed that the Fed had received a grand jury subpoena and threatened criminal prosecution for his testimony in June about headquarters renovations.

    …Escalating tensions are fueling concerns about central bank autonomy and could upend the bullish option sentiment seen at the start of the year. The U.S. dollar has started 2026 on a strong note, especially against the euro, which is a complete reversal from December. This leaves short-term positions vulnerable to further unwinding amid the latest developments.

    Nigel Green, chief executive of financial advisory firm deVere Group, wrote in a report that the dollar’s status as the world’s reserve currency depends on institutional trust. “History tells us that countries that allow political leaders to dominate their central banks pay a heavy economic price.”

    Read more here.

  • Analysts react to Justice Department probe into Powell

    Reuters obtained the following comments from analysts and investors regarding the Trump administration’s moves targeting Federal Reserve Chairman Jerome Powell:

    VISHNU VARATHAN, Head of Macro Research, Asia ex-Japan, Mizuho, ​​Singapore

    “The issue of Fed independence is very active right now and will likely be re-evaluated every few meetings.

    “I think I’m still not sure how sustained and confrontational the attacks on the Fed might be. At some point, Trump could still appoint someone with some credibility and allow that person to run the show — so that’s probably why markets haven’t panicked yet.”

    ANDREW LILLEY, Chief Rates Strategist, Barrenjoe, Sydney

    “Trump is pulling at the loose thread of central bank independence. I don’t even believe he expects Chairman Powell to be charged… The only reason he’s taking these steps is because he knows he’s not going to control the Fed, so he wants to apply as much undue pressure as possible.

    “It’s not good. Don’t get me wrong, but I think it’s going to get nowhere. Investors won’t be happy about it, but it shows that Trump really has no other levers to pull. The cash rate will stay where the majority of the FOMC wants it to be.”

  • Fed independence in focus, gold prices hit record high

    Bloomberg reports:

    Read more here.

  • Jerome Powell announces DOJ has subpoenaed Fed

    Bloomberg reports:

    Read more here.

  • Trump says he may exclude Exxon Mobil from Venezuela due to personal feelings about CEO’s comments

    The Associated Press reported:

    Read more here.

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