Stocks Poised for a Weaker Start as Investors Eye Fed Moves, Await U.S. Inflation Figures and Major Bank Results

U.S. Stock Index Futures Decline Amid Fed and White House Tensions

Early Monday, futures for the S&P 500 E-Mini (ESH26) dropped by 0.64%, while Nasdaq 100 E-Mini futures (NQH26) slipped 0.82%. The downturn comes as friction intensifies between the Trump administration and the Federal Reserve, weighing on investor confidence.

Federal Reserve Faces Legal Pressure

The Federal Reserve revealed it received grand jury subpoenas on Friday, raising the possibility of criminal charges connected to Chair Jerome Powell’s Senate testimony last June. That testimony included discussion of a long-term renovation at the Fed’s Washington headquarters, a project President Trump has publicly criticized. In a Sunday statement, Powell described the subpoenas as part of a broader pattern of threats and pressure from the administration. He emphasized that the risk of prosecution stems from the Fed’s commitment to setting interest rates based on economic analysis rather than presidential preference. The development has sparked renewed debate over the independence of the central bank.

Market Analyst Reactions

Nick Twidale, chief market analyst at AT Global Markets, commented, “The investigation into Powell casts a negative light on the Fed, the U.S. government, and the markets overall. Powell’s remarks are forceful, and he appears ready to directly challenge the president.”

Key Events on the Horizon

This week, investors are watching for crucial U.S. inflation figures, statements from Federal Reserve officials, and the kickoff of fourth-quarter earnings season.

Friday’s Market Recap

Major U.S. stock indices closed higher on Friday, with the S&P 500 reaching a new record. Data storage companies led the rally: Sandisk (SNDK) soared over 12%, and Seagate Technology Holdings (STX) gained more than 6%. Chipmakers also advanced, highlighted by a 10% surge in Intel (INTC) after President Trump expressed support for the company following a meeting with its CEO. Nuclear energy firms Vistra (VST) and Oklo (OKLO) jumped over 10% and 7%, respectively, after announcing separate power supply deals with Meta Platforms. On the downside, Qualcomm (QCOM) fell more than 2% after Mizuho downgraded the stock.

Additional Headlines from Barchart

Recent U.S. Economic Data

The Labor Department reported that nonfarm payrolls increased by 50,000 in December, falling short of the 66,000 forecast. However, the unemployment rate edged down to 4.4%, slightly better than the expected 4.5%. Average hourly earnings rose 0.3% month-over-month and 3.8% year-over-year, surpassing the anticipated 3.6% annual increase. Additionally, the University of Michigan’s preliminary consumer sentiment index for January climbed to 54.0, beating expectations.

Fed Officials Weigh In

Richmond Fed President Tom Barkin noted that the latest jobs report suggests ongoing modest employment growth and a restrained hiring environment. He described the current labor market as balanced but cautioned that policymakers must remain alert to risks of rising unemployment and persistent inflation. San Francisco Fed President Mary Daly characterized the central bank’s current approach as “fine-tuning” rather than making major policy shifts. Atlanta Fed President Raphael Bostic reiterated concerns about elevated inflation, emphasizing the need to stay focused on price stability even as labor markets cool.

Interest Rate Outlook

Futures markets are currently pricing in a 94.3% chance that the Fed will leave rates unchanged at its January meeting, with only a 5.7% probability of a 25 basis point cut.

Upcoming Economic Reports

This week’s main focus is the December U.S. consumer inflation report, which will help shape expectations for future Fed rate cuts. Economists at ING anticipate that falling energy prices, slower rent increases, and moderating wage growth will push annual inflation closer to 2% by year-end. November retail sales data will also be closely watched for insights into the 2025 holiday season. Other key releases include the Producer Price Index (PPI), Core PPI, new and existing home sales, export and import price indexes, initial jobless claims, the Philly Fed and Empire State manufacturing indexes, and industrial production figures.

Fed Speakers and Beige Book

Throughout the week, investors will hear from several Fed officials, including Bostic, Barkin, Williams, Musalem, Paulson, Miran, Kashkari, Barr, Bowman, and Jefferson. The Fed will also publish its Beige Book, offering a regional snapshot of economic conditions ahead of the next policy meeting.

Corporate Earnings Season Begins

Fourth-quarter earnings reports start this week. JPMorgan Chase (JPM) will announce results on Tuesday, followed by Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C) on Wednesday. Morgan Stanley (MS) and Goldman Sachs (GS) report Thursday. Other notable companies releasing earnings include Delta Air Lines (DAL), Bank of New York (BK), BlackRock (BLK), and PNC Financial (PNC).

Monday’s Economic Calendar

There are no major U.S. economic data releases scheduled for Monday.

Bond Market Update

The yield on the 10-year U.S. Treasury note stands at 4.202%, up 0.72%.

Global Markets Overview

Europe

The Euro Stoxx 50 Index slipped 0.18% in early trading, pulling back from record highs as concerns over Fed independence and President Trump’s proposal to cap credit card interest rates dampened sentiment. Bank stocks led the decline after Trump called for a one-year 10% cap on credit card rates. Auto stocks also weakened, while defense and mining shares provided some support. The Sentix index, which measures investor confidence in the Eurozone, improved more than expected in January, reaching its highest level since July 2025. Investors are awaiting industrial production data for November and final December inflation numbers from several major Eurozone economies. Germany’s first provisional annual GDP estimate is also due this week. BE Semiconductor Industries N.V. (BESI.NA) rose over 5% after reporting strong preliminary Q4 orders, driven by demand from Asian subcontractors for data center applications.

• Eurozone Sentix Investor Confidence Index for January: -1.8 (better than forecast of -5.1)

Asia

China’s Shanghai Composite Index gained 1.09%, reaching a new decade high as optimism over artificial intelligence and expectations for further policy support lifted sentiment. AI-related stocks were among the top performers, and commercial space companies rallied after China applied for frequency and orbital resources for 203,000 satellites. Solar stocks also advanced following plans to end export tax rebates on certain products. Trading volume on mainland exchanges hit a record 3.64 trillion yuan ($521.8 billion). The Chinese government is considering new fiscal and financial measures to boost domestic demand, with a focus on supporting household consumption. Chip designer OmniVision Integrated Circuits Group surged 16% in its Hong Kong debut after raising $616 million. Investors are watching for China’s December trade and credit data, as well as foreign direct investment figures.

Japan’s financial markets were closed for the Coming of Age Day holiday and will reopen on Tuesday.

Pre-Market Movers in U.S. Stocks

• The “Magnificent Seven” tech stocks are under pressure before the opening bell, with Nvidia (NVDA) and Meta Platforms (META) both down over 1%.
• Semiconductor shares are weaker, as Intel (INTC) falls more than 2% and Micron Technology (MU) drops over 1%.
• Banks and financial firms with significant credit card businesses are declining after President Trump’s call for a 10% cap on credit card interest rates. Citigroup (C) is down over 4%, JPMorgan Chase (JPM) nearly 3%, American Express (AXP) more than 4%, and both Capital One (COF) and Synchrony Financial (SYF) over 9% lower.
• Gold mining companies are rising as gold prices hit new highs amid concerns about Fed independence and geopolitical risks. Newmont (NEM) is up nearly 3%, and Freeport-McMoran (FCX) more than 2%.
• Walmart (WMT) is up over 3% after Nasdaq announced the retailer will join the Nasdaq 100 Index on January 20th, replacing AstraZeneca.

For more details on pre-market stock movers, visit the relevant market resources.

Today’s U.S. Earnings Highlights: Monday, January 12

• WaFd Inc (WAFD)
• Platinum Group Metals (PLG)
• Lifecore Biomedical (LFCR)
• Loop Industries (LOOP)
• Brookmount Explorations Inc (BMXI)