- Home
- Investing
- Stocks
The Trump administration's threats to Fed independence and bank profitability did little to stop the bulls on Monday.
By
Karee Venema
published
12 January 2026
in News
When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works.
Share Share by:- Copy link
- X
Stocks opened lower Monday as news that the Department of Justice is investigating Federal Reserve Chair Jerome Powell shook market sentiment. However, the main equity indexes found their footing by lunchtime as participants turned their attention to this week's key inflation data and the start of fourth-quarter earnings season.
Late Friday, the Fed was issued subpoenas that threaten criminal indictment for Chair Powell over his testimony to the Senate Banking Committee last summer regarding renovations to the central bank's buildings.
In what is being called an "extraordinary" step, Powell released a video statement on Sunday night that calls the move "an unprecedented action" – one whose outcome threatens the independence and integrity of the Federal Reserve.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
CLICK FOR FREE ISSUE
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Sign up"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," Powell said.
Mark Malek, chief investment officer at Siebert Financial, is hoping the subpoenas and threat of criminal investigation are not a ploy to manipulate Powell & Co.
Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.
"The Fed must remain independent in order for the central bank to remain effective and – and this is important – for the integrity of the U.S. Dollar and the all-important Treasury markets to remain the world's benchmarks. Full stop."
AXP sheds $11 billion in market value on Trump's rate-cap plan
Market participants eventually brushed off Fed concerns. The yield on the 2-year Treasury note edged up 0.1 basis point to 3.541% and the yield on the 10-year Treasury was 1.8 basis points higher at 4.189%.
As for stocks, the S&P 500 rose 0.2% to 6,977 and the Dow Jones Industrial Average gained 0.2% to 49,590 – new record closing highs. The Nasdaq Composite added 0.3% to 23,733.
Track all markets on TradingViewFinancial stocks created the biggest headwind to the blue-chip index after President Donald Trump on Friday proposed a one-year 10% cap on interest rates that credit card companies charge customers.
American Express (AXP) was the worst-performing Dow Jones stock today, shedding 4.3% – or $11 billion in market value – on Trump's rate-cap plan. But UBS Global Research analyst Erika Najarian believes the freeze is "unlikely to be implemented."
Track all markets on TradingViewFor one, Najarian says, such a move would require an act of Congress. She also notes that rate caps were not included in last summer's GENIUS Act, even though they were reportedly under consideration, "suggesting that the industry lobby made an impact.
JPMorgan sinks ahead of earnings
JPMorgan Chase (JPM) was another sinking financial stock, shedding 1.4% on Trump's rate-cap proposal. The country's biggest bank by assets will disclose its quarterly results ahead of Tuesday's open, unofficially marking the start of Q4 earnings season.
Track all markets on TradingViewBofA Securities analyst Ebrahim Poonawala recently raised his Q4 earnings-per-share estimate for JPM to $4.97 from $4.87, explaining that weaker banking revenue for the three-month period will be more than offset by strong trading.
Poonawala has a Buy rating and $362 price target on the blue chip stock, representing implied upside of almost 12% to current levels.
Abercrombie & Fitch plunges nearly 18% on weak guidance
Abercrombie & Fitch (ANF) plummeted 17.7% on Monday after the apparel retailer updated its guidance for the holiday quarter and full fiscal year.
Track all markets on TradingViewThe company now expects fourth-quarter sales growth of "around 5%" and earnings per share of $3.50 to $3.60. This compares to its previous outlook for Q4 sales growth of 4% to 6% and EPS of $3.40 to $3.70.
ANF also narrowed its full-year forecast, anticipating sales growth of "at least 6%" and earnings per share of $10.30 to $10.40. Its prior guidance called for sales "growth in the range of 6% to 7%" and EPS of $10.2 to $10.50.
Today's selloff marks a change of pace for the retail stock. Heading into Monday's session, ANF was up nearly 80% since late November.
Related content
- Highest-Yielding Dividend Stocks in the S&P 500
- Stock Market Trading Hours: What Time Is the Stock Market Open Today?
- 30 Stocks That Could Rally 30% or More
Karee VenemaSocial Links NavigationSenior Investing Editor, Kiplinger.comWith over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
Latest-
6 Champagne Problems Successful Retirees Face
What do you do if your biggest financial threat is simply having too much of a good thing — money?
-
Congress is Set for a Busy Winter
The Kiplinger Letter The Letter editors review the bills Congress will decide on this year. The government funding bill is paramount, but other issues vie for lawmakers’ attention.
-
A Portfolio Checklist If You're Planning to Retire in 2027
Are you planning on retiring in 2027? This portfolio checklist will help put you on the right path.
-
A Portfolio Checklist If You're Planning to Retire in 2027
Are you planning on retiring in 2027? This portfolio checklist will help put you on the right path.
-
How to Avoid Being Buried by the Tax Avalanche in Retirement: Tips From a Wealth Adviser
All that cash you have in tax-deferred accounts could launch you into a higher tax bracket when you start withdrawals. It's time to protect your income.
-
I'm a Financial Adviser: This Is the Real Secret to Retirement Success
For real retirement security, forget about chasing returns and focus instead on the things you can control: income, taxes, risk-taking and decision-making.
-
Is Your Retirement Plan Based on Social Security Fact or Fiction?
One in two Americans don't know much about Social Security — and some are basing their retirement on mistaken beliefs. It's time to separate fact from fiction.
-
Are You Investing to Score Points or Make Money? Cautionary Tales From an Investment Adviser
Have you become numb to risk? Is your brokerage app or website fueling your desire to trade? An investment adviser explains why it always pays to be cautious.
-
Are You Overlooking These 5 Investment Opportunities in 2026?
As investors game-plan for the year ahead, these five areas of the equity markets deserve their attention.
-
Are Roth Conversions for Retirees Dead in 2026 Because of the New Tax Law?
The OBBBA's permanent lower tax rates removed the urgency for Roth conversions. Retirees thinking of stopping or blindly continuing them should do this instead.
-
Worried About Retirement? 4 Tasks to Calm Your Nerves and Build Confidence, From a Retirement Pro
If you're feeling shaky about your finances as you approach retirement, here are four tasks to complete that will help you focus and steady your nerves.
