United States benchmark averages rose to fresh highs on Monday (Tuesday AEDT) despite growing threats to the Federal Reserve’s independence amid a criminal probe into its chair Jerome Powell.
The S&P 500 closed 0.2% higher at 6,977.27, the Dow Jones Industrial Average was up 0.2% to 49,590 and the Nasdaq Composite increased 0.3% to 23,733.90. The S&P and Dow reached new intraday highs before closing at records.
Banking stocks dropped after U.S. President Donald Trump called for a one year cap on credit card interest rates of 10%, with the S&P’s financials index down 0.8%.
Capital One shares shed 6.4%, Citigroup lost 3%, and JPMorgan Chase dipped 1.4%. Shares in credit card services companies Visa and Mastercard fell 1.9% and 1.6%.
Banks including JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs will report their earnings this week.
Walmart shares rose 3%, meanwhile as it is set to replace AstraZeneca in the Nasdaq-100 next week.
Powell said yesterday the Department of Justice had begun a criminal probe into his conduct, which is reportedly investigating whether Powell lied to Congress during testimony about the renovation of the Fed’s office buildings.
Trump had previously threatened to fire Powell for not cutting interest rates more aggressively. “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.
Spartan Capital Securities chief market economist Peter Cardillo said: “The news that Powell is being investigated by the Justice Department was basically telegraphed by Trump, and so I think the market is taking it in stride for now.”
Two-year bond yields were roughly flat at 3.536%, while 10-year yields were up 0.01% to 4.179%.
