Stocks Retreat on Concerns Over Fed Independence

The S&P 500 Index ($SPX) (SPY) today is down -0.23%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.27%.  March E-mini S&P futures (ESH26) are down -0.22%, and March E-mini Nasdaq futures (NQH26) are down -0.30%.

Stock indexes are under pressure today as the Trump administration's attacks on the Federal Reserve have increased concerns about Fed independence and prompted a “Sell America” sentiment in US asset markets.  Stocks, government bonds, and the dollar are sliding today, and gold and silver soared to new all-time highs after Fed Chair Powell said the threat of a US criminal indictment was a consequence of a disagreement with the Trump administration over monetary policy.  The 10-year T-note yield is up +2 bp to 4.19%. 

Also, credit card companies and bank stocks are sliding today after President Trump said that credit-card lenders would be "in violation of the law" if they don't cap interest rates at 10% for one year. He set a January 20 deadline for compliance.

Sunday evening, Fed Chair Powell said the Fed had been served grand jury subpoenas from the Justice Department late last Friday, threatening a criminal indictment related to his June congressional testimony on ongoing renovations of the Fed's headquarters.  Powell said, "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 the preferences of the president."

Market focus this week will be on economic news and any fresh news on the Federal Reserve.  On Tuesday, Dec CPI is expected to remain unchanged from Nov at +2.7% y/y and Dec core CPI is expected to edge higher to +2.7% y/y from +2.6% y/y in Nov.  Also, Oct new home sales are expected to fall -10.6% m/m to 715,000.   On Wednesday, Nov PPI final demand is expected to increase +2.7% y/y, and Nov core PPI is also expected to climb by +2.7% y/y.  Also, Nov retail sales are expected to have increased +0.5% m/m and +0.4% m/m ex-autos.  In addition, Dec existing home sales are expected to climb +2.2% m/m to 4.22 million. Finally, the Supreme Court on Wednesday may rule on the legality of President Trump’s tariffs.  On Thursday, weekly initial unemployment claims are expected to increase by +7,000 to 215,000.  Also, the Jan Empire manufacturing survey of general business conditions is expected to climb by +4.9 to 1.0.  On Friday, Dec manufacturing production is expected to fall -0.1% m/m.  Also, the Jan NAHB housing market index is expected to increase by +1 to 40.

The markets are discounting the odds at 5% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

Overseas stock markets are higher today.  The Euro Stoxx 50 rose to a new record high and is up +0.13%.  China’s Shanghai Composite rallied to a new 10.5-year high and closed up +1.09%.  Japan’s Nikkei Stock 225 was closed for the Coming-of-Age Day holiday.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -4 ticks.  The 10-year T-note yield is up +2.6 bp to 4.191%.  Mar T-notes are falling today on concerns about Fed independence after the Federal Reserve was served subpoenas from the Justice Department threatening a criminal indictment tied to his June testimony on Fed headquarters renovations.  Fed Chair Powell said the threat of criminal charges is the consequence of the Fed not going along with President Trump’s calls for lower interest rates.  Also, rising inflation expectations are bearish for T-notes, as the 10-year breakeven inflation rate rose to a 1.75-month high of 2.30% today. 

Supply pressures are also weighing on T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with today’s $58 billion auction of 3-year T-notes and $39 billion auction of 10-year T-notes. 

European government bond yields are mixed today.  The 10-year German bund yield is down -1.8 bp to 2.845%.  The 10-year UK gilt yield is up +1.2 bp to 4.386%.

The Eurozone Jan Sentix investor confidence index rose by +4.4 to a 6-month high of -1.8, stronger than expectations of -5.0.

Swaps are discounting a 1% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.

US Stock Movers

Credit card companies and bank stocks are sliding today after President Trump said credit-card lenders would be “in violation of the law” if they don’t cap interest rates at 10% for one year.  Synchrony Financial (SYF) is down more than -7% to lead losers in the S&P 500.  Capital One Financial (COF) is down more than -5% and American Express (AXP) is down more than -4% to lead losers in the Dow Jones industrials.  Also, Visa (V) and Mastercard (MA) are down more than -3%, and Citigroup (C) is down more than -2%.  In addition, JPMorgan Chase (JPM) and Wells Fargo & Co (WFC) are down more than -1%.

Mining stocks are climbing today as the price of gold and silver soared to new all-time highs.  Hecla Mining (HL) is up more than +8%, and Coeur Mining (CDE) is up more than +6%.  Also, Freeport-McMoRan (FCX), Newmont Mining (NEM), and Barrick Mining (B) are up more than  +3%. 

Henry Schein (HSIC) is down more than -4% after appointing Fedd Lowery as the next CEO to replace Stanley Begman, who earlier said he will retire effective March 2.

Shake Shack (SHAK) is down more than -2% after reporting preliminary Q4 revenue of $400.5 million, below its forecast of $406 to $412 million, and weaker than the consensus of $409 million. 

SLM Corp (SLM) is down more than -2% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $25. 

Gitlab (GTLB) is down more than -1% after Barclays downgraded the stock to underweight from equal weight with a price target of $34.

Snowflake (SNOW) is down more than -1% after Barclays downgraded the stock to equal weight from overweight.

UnitedHealth Group (UNH) is down more than -1% after the Wall Street Journal reported that a Senate committee investigating the company’s practices found it deployed “aggressive tactics” to collect payment-boosting diagnoses for its Medicare Advantage members.

ANI Pharmaceuticals (ANIP) is up more than +8% after forecasting 2026 net revenue of $1.055 billion to $1.1185 billion, stronger than the consensus of $958.9 million.

Dexcom (DXCM) is up more than +4% to lead gainers in the Nasdaq 100 after reporting Q3 preliminary revenue of $1.26 billion, better than the consensus of $1.24 billion. 

Akamai Technologies (AKAM) is up more than +4% to lead gainers in the S&P 500 after Morgan Stanley double-upgraded the stock to overweight from underweight with a price target of $115. 

Albemarle (ALB) is up more than +3% after Scotiabank upgraded the stock to sector outperform from sector perform with a price target of $200.

Walmart (WMT) is up more than +2% to lead gainers in the Dow Jones Industrials after Nasdaq Global Indexes said the stock will replace AstraZeneca Plc in the Nasdaq 100 Index beginning January 20.  

Palantir Technologies (PLTR) is up more than +1% after Citigroup Global Markets upgraded the stock to buy from neutral with a price target of $235.

Earnings Reports(1/12/2026)

XCF Global Inc (SAFX).