US stocks wobbled on Monday, pulling back from records amid concerns over Federal Reserve independence after US prosecutors opened a criminal investigation into Chair Jerome Powell.
The Dow Jones Industrial Average (^DJI) sank below the flat line, while the S&P 500 (^GSPC) rose modestly. The tech-heavy Nasdaq Composite (^IXIC) added 0.2% on the heels of all-time closing highs for Wall Street stocks. The three indexes began Monday’s session lower but pared losses in late morning trading.
Rattled markets are turning their backs on US assets after Powell said the Justice Department has subpoenaed the Fed, threatening criminal charges over his testimony on building renovations. In a strongly worded statement, Powell said the action is an escalation of President Trump’s campaign to pressure the Fed into cutting interest rates.
“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 wrote, describing the concerns cited in the subpoenas as “pretexts.”
The DOJ moves and Powell’s sharp response promise to turn an already high-stakes White House-Fed struggle into open war. The developments have reinforced concerns over political interference in monetary policy — worries that helped send gold (GC=F) to record peaks and the dollar (DX-Y.NYB) to its lowest level in three weeks.
In corporates, bank and other financial services stocks slumped thanks to a warning to credit card issuers from Trump. Lenders will be “in violation of the law” if they don’t cap interest rates at 10%, he told reporters on Sunday. Shares of Capital One (COF) slid 7% to lead early trading losses. Citi (C) and JPMorgan (JPM) also fell in a downbeat start to a week when big US banks will kick off earnings season.
The unsettled mood comes as investors get ready for this week’s updates on inflation in December, with the Consumer Price Index (CPI) reading due on Tuesday. Markets were overwhelmingly betting on no rate cut from the Fed this month after Friday’s December jobs report showed continued cooling in the labor market without signaling a sharp economic slowdown.
Meanwhile, Wall Street kept a watchful eye on Iran, as public unrest edges the country toward revolution and Trump says the US is “looking” at military action as a response to a crackdown on protests. Oil prices retreated as investors weighed the potential impact on crude supply.
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Nvidia, Eli Lilly announce $1 billion investment in AI drug discovery lab
AI chipmaker Nvidia (NVDA) and pharmaceutical giant Eli Lilly (LLY) on Monday announced that the two companies will jointly invest $1 billion to create a lab in San Francisco focused on using AI to accelerate drug discovery.
“Combining our volumes of data and scientific knowledge with NVIDIA’s computational power and model-building expertise could reinvent drug discovery as we know it,” said Lilly CEO David Ricks.
The investment builds on Nvidia and Lilly’s existing partnership. Lilly in October said it is building an AI factory with Nvidia’s Blackwell systems to speed up drug discovery timelines.
LLY shares rose fractionally, while NVDA hovered below the flatline.
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