U.S. stocks ended slightly higher, the dollar weakened and gold prices jumped to record levels after Federal Reserve Chair Jerome Powell said President Trump was seeking to pressure the central bank into cutting interest rates by threatening him with a criminal indictment.
The market’s reaction reflected renewed concern about Fed independence and the broader strength of U.S. institutions. Powell said prosecutors are investigating his testimony last summer about the central bank’s renovation project — a move he called a “pretext” for political influence over monetary policy, a charge Trump has denied.
After early losses, stocks recovered, with the S&P 500 and Nasdaq composite closing up modestly. The dollar slid against currencies such as the euro, British pound and Swiss franc, while longer-dated Treasury yields climbed.
Gold, traditionally viewed as a haven asset, jumped sharply, with prices hitting record highs, and silver futures also climbed. Geopolitical tensions, including rising concerns about Iran, added to market jitters and boosted European defense shares.
Financial stocks were hit after Trump called for a cap on credit-card interest rates, with names like Capital One, Synchrony Financial and Citigroup among the hardest hit. Chinese and Japanese markets rallied, with benchmarks rising more than 1% and trading volumes in mainland China at record levels.
Frequently Asked Questions
Why did gold and silver hit record highs?
Gold and silver surged as investors moved into safe-haven assets amid concerns over Federal Reserve independence, political pressure on monetary policy, and rising geopolitical tensions.
How does pressure on the Federal Reserve affect markets?
Markets rely on the Fed being independent. Any threat to that independence raises uncertainty, weakens confidence in the dollar, and often boosts assets like gold while increasing volatility in stocks and bonds.
Why did the U.S. dollar weaken after Powell’s comments?
The dollar fell as investors reassessed U.S. institutional stability and future interest-rate policy, reducing demand for the currency relative to the euro, pound, and Swiss franc.
Why were financial stocks among the biggest losers?
Financial shares dropped after calls to cap credit-card interest rates, which could hurt bank profitability and lending margins.
How are global markets reacting to these developments?
While U.S. markets showed mixed moves, Asian stocks rallied strongly, supported by high trading volumes in China and expectations of continued liquidity and growth support.
