Powell Probe Rocks Fed; S&P & Dow Slip, Nasdaq Now

Powell Probe Rocks Fed; S&P & Dow Slip, Nasdaq Now

Introduction
U.S. benchmarks retreated after the latest round of corporate reports and a new political development involving the Federal Reserve. The S&P 500 ticked down modestly while the Dow posted a larger drop, cap-weighted technology held firm and selected healthcare names outperformed. Beyond earnings, a Justice Department probe tied to Federal Reserve Chair Jerome Powell injected an unusual dose of political risk into an otherwise data-driven session, nudging traders toward safe havens.

Market movers: earnings, yields and politics

Mixed earnings set the tone

Quarterly reports kicked off with a clear split. Large financials and travel-related companies underperformed after misses and cautious outlooks. JPMorgan Chase shares fell sharply after missing both profit and revenue expectations, while Delta Air Lines trimmed its forward guidance despite beating on the headline numbers. Consumer-facing Chipotle also declined amid management changes.

By contrast, parts of the healthcare complex delivered outsized gains. Moderna jumped after raising revenue guidance and outlining pipeline updates, with the stock rallying double digits. Other health and medical-supply names also posted strong moves on better-than-expected results and upbeat outlooks.

Bond yields ease, rate-cut expectations resurface

Inflation readings that broadly tracked expectations helped push Treasury yields lower, alleviating pressure on interest-rate sensitive stocks and lifting expectations that the Federal Reserve may begin cutting rates in 2026. The easing in yields supported equity sectors that benefit from lower rates while investors parsed company guidance for evidence of demand resilience.

Political risk: DOJ probe of Fed Chair Powell

What happened and why it matters

A Department of Justice inquiry tied to testimony by Fed Chair Jerome Powell about a renovation project drew broad attention. The legal action—reported via a grand jury subpoena related to Powell’s prior testimony—triggered immediate market headlines because it touches the independence and perceived politicization of the central bank. Former Fed chairs and Treasury officials publicly warned that moves against the Fed chair threaten the institution’s credibility.

Market reaction and safe-haven flows

Despite the political noise, markets showed resilience, with many investors still betting that the Fed will remain institutionally independent. That said, the news prompted a rotation into traditional safety plays: precious metals such as gold and silver rallied as part of a near-term “debasement” bid, while some traders reduced exposure to more politically sensitive financial names.

Notable stock moves

• JPMorgan Chase: Shares fell after an earnings miss and weaker-than-expected revenue, amplifying sector pressure.
• Delta Air Lines: Stock declined on cautious forward guidance despite beating estimates for the quarter.
• Chipotle: Dropped amid leadership change announcements that prompted investor concern.
• Moderna: Surged after raising guidance and updating investors on product progress, one of the day’s strongest performers.
• Indexes: S&P 500 edged down ~0.2%; Dow Jones Industrials dropped about 0.8% (roughly a 398-point move); Nasdaq held relatively flat, reflecting strength in tech-heavy names.

Why this matters for investors

Two themes should guide near-term positioning: first, company-specific earnings and guidance remain the primary driver for stock-level performance during reporting season; second, political developments that touch central-bank credibility can amplify market volatility beyond fundamentals. Portfolio managers are balancing rate-cut optimism from cooler yields against headline risk tied to governance and legal actions.

Conclusion

The session combined ordinary earnings-driven re-pricing with an extraordinary political event. Mixed corporate results nudged broad indexes lower, while a DOJ inquiry involving the Fed chair added an atypical layer of geopolitical risk that pushed some flows into gold and other safe havens. Investors will likely remain focused on upcoming earnings reports and any legal developments that could affect perceptions of Fed independence, while watching yield moves for signals on the timing of potential rate cuts.