Dow Jones futures edge lower amid worries over Fed policy and global tensions

US Stock Index Futures Retreat Amid Fed Scrutiny and Geopolitical Tensions

During Monday's European trading hours, Dow Jones futures slipped by 0.52% to approximately 49,450. Meanwhile, S&P 500 and Nasdaq 100 futures dropped 0.58% and 0.82%, settling near 6,960 and 25,720, respectively. Investor caution intensified following reports that federal prosecutors have launched a criminal investigation into Federal Reserve Chair Jerome Powell. The probe, as reported by the New York Times, centers on the renovation of the Fed’s Washington headquarters and whether Powell provided misleading information to Congress regarding the project's details.

US equity futures also faced downward pressure as traders weighed ongoing global risks. Reports indicate President Donald Trump is considering potential actions against Iran, where widespread unrest has persisted for a third consecutive week, resulting in hundreds of casualties. Additionally, US involvement in South American affairs has further contributed to market uncertainty.

Despite these headwinds, expectations of a more accommodative Federal Reserve could lend some support to US stocks. December’s employment report showed Nonfarm Payrolls increasing by 50,000—falling short of both November’s revised 56,000 and the anticipated 60,000—while the unemployment rate improved slightly to 4.4% from 4.6%.

Tom Barkin, President of the Richmond Fed, expressed optimism about the lower unemployment rate, describing job gains as steady yet modest. He also highlighted that most hiring was concentrated in healthcare and artificial intelligence sectors, and noted ongoing uncertainty about future labor market trends. According to CME Group’s FedWatch tool, there is about a 95% probability that the Federal Reserve will keep interest rates unchanged at the upcoming January 27–28 meeting.

Investors remain cautious ahead of a busy week featuring key US corporate earnings and critical inflation data, both of which could shape future Federal Reserve decisions. Major financial institutions—including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Morgan Stanley, and Goldman Sachs—are scheduled to release their results this week, alongside reports from Bank of New York Mellon, BlackRock, and PNC Financial.