Stocks, Dollar Drop on Fed Fears as Gold Hits High: Markets Wrap
(Bloomberg) — Stock futures and the dollar fell as investors trimmed exposure to US assets following deepening tensions between the Trump administration and the Federal Reserve. Longer-dated yields surged while gold hit a new high.
Contracts on the S&P 500 slipped 0.6% after Chair Jerome Powell said the Fed had been served grand jury subpoenas over renovations at its headquarters. Powell said the action stemmed from policymakers’ reluctance to follow the White House’s preferences on interest rates. Nasdaq 100 futures dropped 0.9%.
The dollar posted its biggest retreat since the start of the Christmas break. Longer-term notes buckled under fears that overly lenient policy could reignite inflation, with the 30-year rate rising five basis points to 4.86%. Gold rallied as much as 2% and the Swiss franc outperformed as investors sought havens.
“Concerns about the Fed’s independence have really been reinforced with the latest criminal investigation,” Jan Hatzius, chief economist at Goldman Sachs Group Inc., said at a strategy conference in London. “Our expectation, though, is that this is a committee decision. I have no doubt that in his remaining term as chair, Powell is going to make decisions based on the economic data.”
Banks and other financial services firms with heavy exposure to credit-card revenue fell on Monday following President Donald Trump’s push to cap rates for a year and set a Jan. 20 deadline.
Barclays Plc dropped as much as 4.8% in London, while Citigroup Inc., American Express Co. and Capital One Financial Corp. dropped in early US trading. Technology shares were broadly weaker as well, with names such as Broadcom Inc., Intel Corp. and Micron Technology Inc. falling more than 1%.
At the start of a week in which Wall Street’s biggest lenders will unofficially kick off earnings season, some traders said strong results could propel the sector into the year’s top performers.
While JPMorgan Chase & Co., Citigroup and Bank of America Corp. are expected to post slower revenue growth as trading gains ease from the elevated levels experienced in recent quarters, investment-banking fees are likely to remain robust following a wave of deals, with upbeat projections for 2026.
“US banks have performed pretty well during the past quarter, so I’ll be looking into whether this earnings season provides confirmation,” said Andrea Tueni, head of sales trading at Saxo Banque France. “If that’s the case, the sector may actually become one of the drivers of this year.”
Oil mostly held its biggest two-day gain since October, as protests in Iran threatened supply from OPEC’s fourth-biggest contributor. Brent traded around $63 a barrel after jumping almost 6% over Thursday and Friday, while West Texas Intermediate was near $59.
Fed officials have signaled they need more economic data before deciding on further rate cuts, after a third consecutive quarter-point reduction last month. Economists at Morgan Stanley, Barclays and Citigroup all pushed back their forecasts of further easing to later in 2026 after monthly US jobs data published Friday.
What Bloomberg Strategists Say:
“The dollar will remain pressured until a new Fed Chair is named. If the new person is seen as being overtly dovish, that risk premium will likely extend through this quarter. Should the greenback continue to head lower, the franc will continue to face pressure to gain. But the currency has rarely been this strong and traders will be wary of potential intervention.”
— Ven Ram, macro strategist. For full analysis, click here.
Separately, the US Supreme Court on Friday failed to weigh in on Trump’s tariffs. The court’s next opinion day will be Wednesday.
Elsewhere, Group-of-Seven finance ministers are meeting in Washington to discuss rare earths Monday, while New York Fed President John Williams and Atlanta Fed President Raphael Bostic are set to speak.
Corporate News:
Abivax SA’s shares surged as much as 31% in early Paris trading as speculation mounted over a possible takeover of the French biotech. Deutsche Bank AG’s India retail assets and wealth management have drawn binding bids from Kotak Mahindra Bank Ltd. and Federal Bank Ltd., according to people familiar with the matter. Shares of China’s biggest food-delivery firms climbed as the nation’s top antitrust body launched a probe into competition practices in the sector, spurring hopes that authorities will rein in subsidy-driven price wars. China Vanke Co. is bracing for its next major test as the developer navigates a proposal to delay bond payments and drafts broader restructuring plans. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.2% as of 10:33 a.m. London time S&P 500 futures fell 0.6% Nasdaq 100 futures fell 0.9% Futures on the Dow Jones Industrial Average fell 0.7% The MSCI Asia Pacific Index rose 0.5% The MSCI Emerging Markets Index rose 0.9% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.4% to $1.1678 The Japanese yen was little changed at 157.94 per dollar The offshore yuan rose 0.1% to 6.9685 per dollar The British pound rose 0.4% to $1.3456 Cryptocurrencies
Bitcoin fell 0.2% to $90,420.37 Ether fell 0.2% to $3,110.16 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.20% Germany’s 10-year yield was little changed at 2.86% Britain’s 10-year yield was little changed at 4.38% Commodities
Brent crude fell 0.5% to $63 a barrel Spot gold rose 1.8% to $4,589.33 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from James Hirai and Julien Ponthus.
©2026 Bloomberg L.P.
