Stocks slid in early trading on Monday hours after reports that the Department of Justice had opened a criminal investigation into Federal Reserve Chair Jerome Powell centered on the central bank leader’s remarks to Congress about an office renovation project.
Powell, who was appointed by Trump in 2017, issued a rare video message rebuking the investigation as a politically motivated effort to influence the Fed’s interest rate policy.
The Dow Jones Industrial Average fell 290 points, or 0.6%, while the S&P 500 fell 0.4%. The tech-heavy Nasdaq declined 0.3%.
Gold and silver — safe-haven assets often seen as a hedge against the stock market — moved higher on Monday.
The selloff on Monday also appeared to include reaction to a social media post from President Donald Trump advocating for a 10% cap on credit card interest rates for one year. Shares of several major banks fell in early trading.
The DOJ’s criminal probe follows a a monthslong influence campaign undertaken by Trump as he has frequently slammed the Fed for what he considers a reluctance to significantly reduce interest rates.
Traders work on the floor at the New York Stock Exchange in New York, Jan. 9, 2026.
Seth Wenig/AP
The criminal probe appears to center on allegations of false remarks made by Powell about a renovation of the Fed’s headquarters during a congressional hearing in June.
Trump has repeatedly denounced Powell for alleged overspending tied to the central bank’s $2.5 billion renovation project. The Fed attributes spending overruns to unforeseen cost increases, saying that its building renovation will ultimately “reduce costs over time by allowing the Board to consolidate most of its operations,” according to the central bank’s website.
Federal law allows the president to remove the Fed chair for “cause” — though no president has ever done so. Powell’s term as chair is set to expire in May, but he can remain on the Fed’s policymaking board until 2028. Powell has not indicated whether he intends to remain on the board.
Treasury yields rose on Monday, suggesting possible concern about the independence of the Fed and its capacity to manage inflation.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks devaluing the asset and, in turn, makes bonds less attractive.
Bond yields rise as bond prices fall. When a selloff hits and demand for bonds dries up, it sends bond prices lower. In turn, bond yields move higher.
A longstanding norm of independence usually insulates the Fed from direct political interference.
In the event a central bank lacks independence, policymakers tend to favor lower interest rates as a means of boosting short-term economic activity, analysts previously told ABC News. But, they added, that posture poses a major risk in the possibility of yearslong inflation fueled by a rise in consumer demand, untethered by interest rates.
