U.S. stock futures slid Sunday night after Federal Reserve Chair Jerome Powell disclosed that the Trump administration has opened a criminal investigation into the central bank, a revelation that rattled investors and added a new layer of uncertainty to already tense relations between the White House and the Fed.
Shortly after 8:30 p.m. EST, Dow Jones Industrial Average futures were down about 200 points, a decline of roughly 0.4 percent. Futures tied to the S&P 500 fell 0.5 percent, while Nasdaq futures dropped 0.7 percent, signaling a rough start to the week on Wall Street.
The overnight selloff followed what Powell described as a stunning development: a criminal probe by the Department of Justice targeting the Federal Reserve and its leadership. According to Powell, the DOJ issued subpoenas to bank officials late Friday and has raised the possibility of criminal charges.
Powell said the investigation centers on renovations to several buildings at the Fed’s Washington, D.C., headquarters, as well as testimony he delivered to the Senate Banking Committee in June related to those renovations. While acknowledging the stated focus of the probe, Powell pushed back hard on its premise, arguing that the concerns being raised are merely a pretext.
The Fed chair suggested the investigation is really about pressuring the central bank over its interest rate decisions rather than the construction project itself. “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,” Powell said in his statement.
He framed the investigation as a broader challenge to the independence of the central bank. “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 added.
The criminal probe represents a dramatic escalation in President Donald Trump’s long-running and very public clash with Powell, whom Trump appointed as Fed chair in 2017. Despite both men being Republicans, their relationship has been marked by repeated confrontations over monetary policy.
Trump’s frustration with Powell dates back to 2018, when the Fed resisted the president’s calls to aggressively cut interest rates. At the time, Trump argued lower rates were needed to give the United States greater leverage in trade negotiations with China and other countries. Powell and the Fed, however, maintained that their decisions would be driven by economic data rather than political strategy.
The tension eased somewhat during the 2020 recession, when the Fed slashed rates and injected massive liquidity into financial markets in response to the economic downturn. That period saw Trump temper his criticism as the central bank moved aggressively to stabilize the economy.
But the feud resurfaced during the 2024 campaign, when Trump repeatedly attacked the Fed for cutting interest rates under former President Joe Biden. Trump accused the central bank of playing politics and distorting the economy, a charge the Fed has consistently denied.
Sunday night’s market reaction underscores how sensitive investors are to any signs of instability involving the Federal Reserve. A criminal investigation into the central bank is unprecedented territory and raises serious questions about the future of monetary policy, institutional independence, and the balance of power between the executive branch and the nation’s most important economic institution.
As markets digest Powell’s remarks, traders and economists alike are bracing for further volatility, with the investigation now looming over both Wall Street and Washington.
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