5 Key Points to Understand Prior to the Stock Market Opening

Market Update: Fed Chair Powell Faces New Scrutiny

President Donald Trump has repeatedly voiced his dissatisfaction with Federal Reserve Chair Jerome Powell, criticizing him for not cutting interest rates more swiftly.

Stock Futures Slide as Fed Independence Questioned

U.S. stock futures are trending downward this morning as investors react to reports that the Trump administration is investigating Fed Chair Jerome Powell. In a video statement late Sunday, Powell revealed that the Justice Department has issued subpoenas to the Federal Reserve and is considering criminal charges related to his Senate testimony about renovations at the Fed building. This heightened uncertainty over the Fed's autonomy is pushing gold prices to unprecedented highs. Meanwhile, financial sector stocks are under pressure following President Trump's proposal to limit credit card interest rates. In contrast, Walmart shares are climbing after the company announced a collaboration with Google to integrate Walmart and Sam's Club products into Google's Gemini AI chatbot. Here’s a summary of the key developments:

• S&P 500 futures are down 0.5%, with Dow and Nasdaq futures falling 0.6% and 0.7% respectively.
• Gold futures have soared over 2%, reaching approximately $4,600 per ounce.
• The 10-year Treasury yield has risen to 4.21%, its highest since early September.
• Bitcoin is trading at $90,600, down from an overnight peak of $92,300.

Justice Department Investigates Powell Over Congressional Testimony

On Sunday night, Jerome Powell announced that the Federal Reserve had received grand jury subpoenas from the Department of Justice, signaling a potential criminal investigation. The inquiry is linked to Powell’s previous testimony to Congress about renovations at the Fed, a topic President Trump has previously criticized him for. Powell clarified that the investigation is not truly about the building project, but rather about the Fed’s commitment to setting interest rates independently, without presidential influence. He emphasized that the outcome will determine whether the Fed can continue to base monetary policy on economic analysis or if it will be subject to political interference. Last year, Trump spent months publicly criticizing Powell for not reducing rates as much as he wanted, arguing that higher rates were harming the economy.

Gold Prices Reach Historic Highs Amid Fed Turmoil

Gold is experiencing a significant rally as investors seek safer assets in light of the DOJ’s probe into Powell. Gold futures have jumped 2.3% to $4,605 per ounce, marking a new all-time high. Concerns about the Fed’s independence have contributed to gold’s strong performance, as the precious metal is often favored during periods of uncertainty. The surge in gold prices also follows renewed geopolitical tensions, including recent U.S. military actions in Venezuela and unrest in Iran, which have further fueled demand for safe-haven investments.

Financial Stocks Drop After Trump Proposes Interest Rate Cap

Financial sector stocks are under pressure after President Trump suggested over the weekend that credit card interest rates should be capped. In a social media post, Trump argued that Americans are being unfairly charged rates between 20% and 30%, and proposed a temporary one-year cap at 10%, effective January 20. The details of how this cap would be implemented remain unclear, but the announcement has already impacted premarket trading. Capital One Financial shares have fallen 7%, while Citigroup and American Express are each down about 4%. JPMorgan Chase, Bank of America, and Wells Fargo have also declined. Executives from these banks will have an opportunity to address the proposal as the new earnings season begins, starting with JPMorgan’s report on Tuesday.

Walmart Stock Surges on Google Gemini Collaboration

Walmart shares are climbing after the company revealed a new partnership with Google’s Gemini AI platform. Soon, users searching for product recommendations in the Gemini app will see Walmart and Sam’s Club items in their results. Customers will be able to link their Walmart and Gemini accounts for personalized recommendations and seamless shopping. Walmart’s stock is up more than 3% in premarket trading, on track to open at a record high. This move is part of Walmart’s broader push to embrace technology, including new app features, automation in distribution centers, and a recent switch of its stock listing to the Nasdaq Exchange.