March S&P 500 E-Mini futures (ESH26) are down -0.64%, and March Nasdaq 100 E-Mini futures (NQH26) are down -0.82% this morning as sentiment took a hit amid escalating tensions between the Trump administration and the Federal Reserve.
The Fed disclosed it had received grand jury subpoenas on Friday, threatening a criminal indictment related to Chair Jerome Powell’s Senate testimony last June. The testimony partly addressed a multiyear renovation project at the Fed’s headquarters in Washington, D.C., which U.S. President Donald Trump has criticized. “This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” Mr. Powell said in a statement on Sunday. He added that “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.” The U.S. government’s move raised concerns over central bank independence.
“The Powell investigation is certainly not a great look for the Fed, the US government, and US markets as a whole,” said Nick Twidale, chief market analyst at AT Global Markets. “Powell’s comments are very strong, and it looks like he is happy to go head-to-head with the president.”
This week, investors look ahead to the release of key U.S. inflation data, comments from Fed officials, and the start of the fourth-quarter earnings season.
In Friday’s trading session, Wall Street’s major equity averages ended in the green, with the S&P 500 notching a new record high. Shares of data storage companies rallied, with Sandisk (SNDK) surging over +12% to lead gainers in the S&P 500 and Seagate Technology Holdings (STX) rising more than +6%. Also, most chip stocks advanced, led by a more than +10% jump in Intel (INTC) after President Trump said the U.S. government was “proud to be a Shareholder of Intel” in a Truth Social post following a meeting with CEO Lip Bu-Tan. In addition, Vistra (VST) soared over +10% and Oklo (OKLO) climbed more than +7% after the nuclear energy companies announced separate agreements to supply power to Meta Platforms for its data centers. On the bearish side, Qualcomm (QCOM) fell over -2% after Mizuho downgraded the stock to Neutral from Outperform with a price target of $175.
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls rose by 50K in December, weaker than expectations of 66K. At the same time, the U.S. unemployment rate ticked down to 4.4% in December, stronger than expectations of 4.5%. In addition, U.S. December average hourly earnings rose +0.3% m/m and +3.8% y/y, compared to expectations of +0.3% m/m and +3.6% y/y. Finally, the University of Michigan’s preliminary U.S. consumer sentiment index rose to 54.0 in January, stronger than expectations of 53.5.
Richmond Fed President Tom Barkin said on Friday that the latest employment data points to modest job growth and a continued low-hiring environment. “This fine balance between a modest job growth environment with a modest labor-supply growth environment seems to be continuing, and that was encouraging,” Barkin said. Still, he noted that policymakers must remain alert to the risks of both higher unemployment and persistent inflation. Also, San Francisco Fed President Mary Daly said in an interview that she sees the central bank as being in a phase of “fine-tuning.” “We’re not in a place where we’re making large policy moves. We’re in a place where we’re fine-tuning as the economy evolves,” Daly said. In addition, Atlanta Fed President Raphael Bostic said, “Inflation is too high, and we have to make sure that we don’t lose sight of the fact that even labor markets have gotten cooler and more people are expressing concerns, that we still have this big concern around inflation.”
Meanwhile, U.S. rate futures have priced in a 94.3% probability of no rate change and a 5.7% chance of a 25 basis point rate cut at the conclusion of the Fed’s January meeting.
The U.S. consumer inflation report for December will be the main highlight this week, as investors continue to gauge the likely timing and extent of additional rate cuts by the Fed. ING economists said the report is unlikely to change expectations that the Fed will lower interest rates at least twice this year. “We believe falling energy prices, slowing housing rents, and weakening wage growth will allow the annual inflation rate to head back towards 2% around the turn of the year,” the economists said in a note. U.S. retail sales data for November will also attract attention, offering insight into the 2025 holiday shopping season. Other noteworthy data releases include the U.S. PPI, the Core PPI, New Home Sales, Existing Home Sales, the Export Price Index, the Import Price Index, Initial Jobless Claims, the Philly Fed Manufacturing Index, the Empire State Manufacturing Index, and Industrial Production.
Market participants will also hear perspectives from a slew of Fed officials, including Bostic, Barkin, Williams, Musalem, Paulson, Miran, Kashkari, Barr, Bowman, and Jefferson, throughout the week.
In addition, the Fed will release its Beige Book survey of regional business contacts this week, which provides an update on economic conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.
Fourth-quarter corporate earnings season kicks off this week. JPMorgan Chase (JPM), the largest bank in the U.S., will report earnings on Tuesday, followed by Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C) the next day. Morgan Stanley (MS) and Goldman Sachs (GS) are set to report results on Thursday. Delta Air Lines (DAL), Bank of New York (BK), BlackRock (BLK), and PNC Financial (PNC) are among other major names scheduled to deliver quarterly updates during the week.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.202%, up +0.72%.
The Euro Stoxx 50 Index is down -0.18% this morning, retreating from a record high as fresh concerns over Fed independence and U.S. President Donald Trump’s call for a cap on credit card interest rates weighed on sentiment. Bank stocks led the declines on Monday after President Trump called for a one-year cap on credit card interest rates at 10% on Friday. Automobile stocks also lost ground. Limiting losses, defense and mining stocks advanced. A survey released on Monday showed that the Sentix index tracking investor morale in the Eurozone improved more than expected in January, reaching its highest level since July 2025. Investor focus this week is on the Eurozone’s industrial production data for November, which will provide a snapshot of growth strength across the region, along with final December inflation figures from France, Spain, Germany, and Italy. Also, Germany’s Federal Statistical Office will release its first provisional annual GDP calculation this week. In addition, Vice President Luis de Guindos is among several European Central Bank officials scheduled to make appearances this week. In corporate news, BE Semiconductor Industries N.V. (BESI.NA) climbed over +5% after reporting higher preliminary Q4 orders, partly driven by demand from Asian subcontractors for data-center applications.
Eurozone’s Sentix Investor Confidence Index was released today.
The Eurozone January Sentix Investor Confidence Index came in at -1.8, stronger than expectations of -5.1.
China’s Shanghai Composite Index (SHCOMP) closed up +1.09%, while Japan’s financial markets were closed for a national holiday.
China’s Shanghai Composite Index closed higher today, hitting a new 10-year high as the country’s progress on AI and expectations of additional policy support continued to boost sentiment. AI-related stocks were among the biggest gainers on Monday. HSBC analysts remain optimistic about the outlook for AI in 2026, citing supportive regulatory policies. Also, commercial space stocks rallied after an International Telecommunication Union filing showed that China applied between December 25th and December 31st, 2025, for frequency and orbital resources for 203,000 satellites across 14 constellations. In addition, solar stocks climbed following the authorities’ plan to cancel export tax rebates on certain solar products, a sector that has struggled with severe overcapacity. Meanwhile, trading volume across mainland Chinese stock exchanges hit a record 3.64 trillion yuan ($521.8 billion) on Monday, as a slow bull market takes shape amid the nation’s supportive policy measures and advances in AI. State broadcaster CCTV reported on Friday that China’s cabinet held a meeting to discuss implementing a package of fiscal and financial policies to stimulate domestic demand, including measures to boost household consumption. Policymakers have vowed to ramp up support to ensure the economy starts 2026 on a solid footing. In corporate news, chip designer OmniVision Integrated Circuits Group jumped +16% in its Hong Kong trading debut after raising $616 million in an offering, the latest in a series of successful listings by Chinese AI and semiconductor companies in recent months. Investor focus this week is on China’s trade and credit lending data for December, which will provide further clues on the health of the world’s second-largest economy. Investors will also keep an eye on China’s foreign direct investment figures this week.
Japan’s Nikkei 225 Stock Index was closed today for the Coming of Age Day holiday. The markets will reopen on Tuesday.
Pre-Market U.S. Stock Movers
The Magnificent Seven stocks are moving lower in pre-market trading amid risk-off sentiment, with Nvidia (NVDA) and Meta Platforms (META) falling over -1%.
Chip stocks retreated in pre-market trading, with Intel (INTC) falling over -2% and Micron Technology (MU) dropping more than -1%.
Banks and other financial services firms with significant exposure to credit-card revenue slumped in pre-market trading following President Trump’s push to cap credit card interest rates at 10% for a year. Citigroup (C) is down over -4% and JPMorgan Chase (JPM) is down nearly -3%. Also, American Express (AXP) is down more than -4%. In addition, Capital One (COF) and Synchrony Financial (SYF) are down over -9%.
Gold mining stocks advanced in pre-market trading after gold prices climbed to a record high amid concerns over Fed independence and geopolitical uncertainty, with Newmont (NEM) gaining nearly +3% and Freeport-McMoran (FCX) rising more than +2%.
Walmart (WMT) climbed over +3% in pre-market trading after Nasdaq said on Friday that the retailer will join the Nasdaq 100 Index on January 20th, replacing AstraZeneca.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - January 12th
WaFd Inc (WAFD), Platinum Group Metals (PLG), Lifecore Biomedical (LFCR), Loop Industries (LOOP), Brookmount Explorations Inc (BMXI).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
