Stocks Waver, Dollar Slides as Pressure Mounts on the Federal Reserve
US stocks were mixed on Monday while bonds and the dollar weakened after renewed political pressure on the Federal Reserve raised concerns among investors about the central bank’s independence.
Markets initially reacted sharply to news of a criminal investigation involving Federal Reserve Chair Jerome Powell, prompting investors to sell US stock futures, government bonds and the dollar late on Sunday. By Monday morning, however, the sell-off had eased.
The Dow Jones Industrial Average fell about 90 points after dropping more than 400 points earlier in the session. The S&P 500 was little changed, while the Nasdaq edged higher.
The US dollar slipped against major currencies, with the dollar index down 0.3 percent. Treasury bonds also weakened, pushing the yield on the benchmark 10-year note to just under 4.2 percent, close to a one-month high. Rising yields suggest that efforts to pressure the Federal Reserve could have the opposite effect of what policymakers intend, keeping borrowing costs elevated rather than lowering them.
Although the market moves were relatively modest, analysts noted that it is unusual for stocks, bonds and the dollar to decline at the same time. Volatility indicators rose, while investors sought safety in traditional havens such as gold.
Gold futures surged more than 3 percent to a record high above $4,600 an ounce, while silver jumped more than 8 percent, also reaching a new peak.
For decades, the independence of the Federal Reserve has been seen as a cornerstone of confidence in US financial markets. Economists warn that sustained political pressure on the central bank could undermine that trust, raising fears of higher inflation and increased market instability.
Lower interest rates can ease borrowing costs for consumers and the government, but analysts say cutting rates too aggressively risks stoking inflation, which can drive investors to demand higher returns on US assets and push yields higher.
Market strategists cautioned that continued challenges to the Fed’s autonomy could weaken the dollar, lift long-term interest rates and increase volatility in global markets — outcomes that run counter to the administration’s stated economic goals.
Monday’s trading echoed, though in milder form, the “Sell America” trend seen in the spring of 2025, when concerns over trade policy triggered a broad retreat from US assets. At that time, stocks neared bear-market territory before rebounding later in the year as tensions eased.
Some analysts believe the current episode could reignite those fears, particularly if political pressure on the central bank intensifies in the months ahead. Others argue that investors have grown accustomed to sharp rhetoric directed at the Federal Reserve and may remain cautious rather than panicked unless there is a clear move to remove its leadership.
The renewed surge in gold and silver has also highlighted what some investors describe as a “debasement trade,” in which money flows into hard assets amid concerns that currencies and government bonds could lose value if confidence in institutions erodes.
For now, markets appear to be balancing those long-term worries against the reality that Federal Reserve policy remains unchanged — but the reaction this week shows how sensitive investors remain to any threat, real or perceived, to the independence of the central bank.
