U.S. stock futures declined as the Department of Justice opened a criminal investigation into Jerome Powell, escalating tensions between the White House and the central bank and unsettling investors.
MARKET INSIDER – Futures tied to the Dow Jones Industrial Average fell nearly 200 points, while S&P 500 and Nasdaq-100 futures dropped 0.5% and 0.7%, respectively. The move reflected a broad “risk-off” response to concerns over the independence of the Federal Reserve.
Powell confirmed in a rare video statement that federal prosecutors had launched a criminal probe linked to his testimony before the Senate Banking Committee regarding renovations of Federal Reserve buildings. He characterized the investigation as an attempt by Donald Trump to pressure the Fed on interest-rate policy and said he would not yield to political influence. Powell’s term as Fed chair expires in May.
Market volatility ticked higher, with the Cboe Volatility Index rising as investors increased downside protection. Strategists said the selloff was less about Powell personally and more about fears that political interference could undermine the Fed’s credibility in managing inflation and monetary policy.
Safe-haven assets rallied. Gold futures jumped around 2%, reflecting investor demand for protection amid worries of a “politicized” central bank. Some analysts warned of a broader “sell-America” trade if global investors apply a higher risk premium to U.S. assets.
The market reaction comes despite U.S. equities sitting at record highs after a strong start to the year. Investors are now bracing for earnings season, with major banks including JPMorgan Chase, Bank of America, Morgan Stanley, and Goldman Sachs set to report, which may further shape sentiment around consumer demand, dealmaking, and market liquidity.
The DOJ investigation into Powell has reignited fears over Federal Reserve independence, prompting a sharp risk-off reaction in futures markets and renewed demand for safe havens, even as U.S. stocks remain near historic highs.
