U.S. stocks and futures were sliding Monday as investors are coming to terms with an unprecedented legal escalation involving Federal Reserve Chair Jerome Powell. News that the Department of Justice has opened a criminal investigation into Powell stoked fears about the independence of the U.S. central bank and added pressure to markets, according to Reuters and other reports .
Both the Dow Jones Industrial Average and S&P 500 futures were down early in trading, per Yahoo! Finance, while the tech-heavy Nasdaq saw sharper losses, suggesting traders were taking some risk off the table amid political and policy uncertainty.
Investors also shifted into traditional safe havens. Gold vaulted to record highs above $4,600 per ounce, and silver climbed as the dollar weakened against other major currencies .
The legal threat stems from a federal probe centered on Powell’s June testimony to Congress about a multi-year, $2.5 billion renovation of the Federal Reserve’s headquarters in Washington. The Justice Department served grand jury subpoenas to the Fed last week and threatened criminal charges tied to that testimony, Powell said in a rare video statement .
Powell addressed the controversy directly.
Video message from Federal Reserve Chair Jerome H. Powell: https://t.co/5dfrkByGyX pic.twitter.com/O4ecNaYaGH
— Federal Reserve (@federalreserve) January 12, 2026
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” he said in an official statement, arguing the investigation was not really about renovation details but about the broader clash between the Fed and the White House .
President Donald Trump, who nominated Powell to lead the Fed and has repeatedly criticized him for resisting pressure to cut interest rates more sharply, told NBC News he knew nothing about the investigation but derided Powell’s performance.
“I don’t know anything about it, but he’s certainly not very good at the Fed,” Trump said, while denying involvement in the probe. “He’s not very good at building buildings.”
Video message from Federal Reserve Chair Jerome H. Powell: https://t.co/5dfrkByGyX pic.twitter.com/O4ecNaYaGH
— Federal Reserve (@federalreserve) January 12, 2026
Concerns about central bank independence have now become a core theme of market unease. Powell’s legal troubles mark a dramatic escalation in a long-running feud between the Fed and the Trump administration, rooted in disagreement over interest rates and limiting government spending a dynamic that markets.
Senator Thom Tillis, a Republican member of the Senate Banking Committee, warned that the Justice Department’s credibility and the Fed’s autonomy were in question.
“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis wrote on X, saying he would oppose future Fed nominees until the matter is resolved .
If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question.
— Senator Thom Tillis (@SenThomTillis) January 12, 2026
Analysts say the threat of political pressure on monetary policy , especially moves that could sway interest rate decisions, can lead to instability. Predictable, independent rate setting is a cornerstone of investor confidence. And, when that is perceived to be at risk, stock markets often reel.
One market watcher told Reuters that this moment represents a rare direct challenge to the Fed’s role. As gold and other safe-haven assets climbed, traders pulled back from equities and the dollar, signaling a broader reassessment of risk in the U.S. financial system .
Whether the investigation will lead to charges, and what that could mean for Powell’s tenure — his term as chair runs through May 2026 — remains unclear. But for now, financial markets are uncertain and stocks are down because of it.
