Traders work on the floor at the New York Stock Exchange in New York City, U.S., Dec. 15, 2025.
Brendan McDermid | Reuters
Stocks fell Monday after the Department of Justice opened a criminal investigation into Federal Reserve Chair Jerome Powell, an apparent escalation by President Donald Trump in his attempt to pressure the central bank.
The Dow Jones Industrial Average lost 278 points, or 0.6%. The S&P 500 shed 0.1% and the Nasdaq Composite was flat. Indexes were off their worst levels of the session, helped by gains in Walmart and some technology stocks. The Dow was down nearly 500 points and the S&P 500 was off 0.5% at session lows.
Trump’s call to cap credit card rates for one year at 10% was also causing some market indigestion to start the week. Critics fear Trump’s plan to aid affordability would backfire and restrict lending, hurting consumers — along with bank profitability.
Bank stocks led the losses in early trading with Citigroup down 3%. JPMorgan and Bank of America were off by more than 1%. Capital One shares slid 6%.
Powell confirmed in an unusual direct video statement Sunday evening that federal prosecutors have opened a criminal investigation related to his Senate Banking Committee testimony on the renovation of Fed office buildings.
Powell said the investigation was another attempt by Trump to influence the central bank’s monetary policy and he would not bow to the pressure. His term as chair is up 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,” said Powell in the statement.
“The market has seen this before and doesn’t like it. It’s not about Powell at this point, it’s about the independence of the Fed,” said Jay Woods, chief market strategist for Freedom Capital Markets. “So when news like this hits, the knee jerk reaction is to sell off.”
The stock market in 2025 largely ignored Trump’s attempts to pressure the Fed as the central bank went on anyway to cut rates three times as inflation stabilized.
But the Fed is largely expected to hold off on further cuts when it next meets later this month as it waits to see how the inflation picture and economy unfolds in the new year. Trump has made clear he would like to see the Fed continue to bring rates lower.
Gold futures, which are seen as a hedge against diminishing Fed independence, jumped 2%. Investors fear a political Fed would be hesitant to snuff out resurgent inflation.
“This is unambiguously risk off. 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,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI.
Walmart gained on enthusiasm ahead of its upcoming inclusion into the Nasdaq-100 index, which is tracked by the popular Invesco QQQ Trust ETF. Palantir rose 1% on an upgrade from Citi.
The fight over central bank independence is coming as the U.S. stock market trades at record highs. The S&P 500 and the 30-stock Dow both finished Friday’s session at new peaks, capping a winning week for the major benchmarks.