US stocks open in the red over Fed independence fears: Dow slips over 300 pts

• Financial stocks led losses amid concerns over Fed independence and Trump's proposal to cap credit card interest rates at 10% for one year, which critics say could restrict lending and hurt bank profitability
• Powell's term as Fed chair expires in May, and the central bank is expected to pause further rate cuts at its upcoming meeting while markets currently price in two 25-basis-point cuts this year versus the Fed's projection of one
• Key earnings reports from JPMorgan, Bank of America, Wells Fargo, Goldman Sachs, and others are due this week alongside critical inflation data (CPI Tuesday, PPI Wednesday) that will help assess if corporate fundamentals support current valuations

Market Summary: US Stocks Decline Amid Fed Independence Concerns

Key Market Movements

US equities opened lower on Monday, January 12, 2026, with the Dow Jones Industrial Average falling 388 points (-0.8%), the S&P 500 declining 0.3%, and the Nasdaq Composite also trading down. The Cboe Volatility Index rose as traders sought portfolio protection.

Primary Catalyst

The Department of Justice launched a criminal investigation into Federal Reserve Chair Jerome Powell regarding his Senate Banking Committee testimony about Fed office building renovations. Powell issued a rare video statement Sunday evening, characterizing the probe as an attack on central bank independence and vowing not to succumb to political pressure. His term expires in May 2026.

Sector Impact

Financial stocks led losses amid dual pressures: the Powell investigation and President Trump's proposal to cap credit card interest rates at 10% for one year. Critics warn this measure could restrict lending, reduce bank profitability, and limit consumer credit access.

Political Tension

The investigation escalates Trump's ongoing conflict with the Fed over monetary policy. Trump has repeatedly criticized Powell for insufficient rate cuts, despite three reductions in late 2025. The timing is sensitive as the Fed is expected to pause rate cuts at its upcoming meeting.

Market Outlook

Investors face a critical week with fourth-quarter earnings reports from major firms including JPMorgan, Bank of America, Wells Fargo, Morgan Stanley, Goldman Sachs, Delta Air Lines, and TSMC. Additionally, inflation data releases Tuesday (CPI) and Wednesday (PPI) will influence rate cut expectations. Markets currently price in two 25-basis-point cuts versus the Fed's projection of one.

The situation introduces significant uncertainty around Fed independence and monetary policy direction amid elevated equity valuations.