Fed Independence Under Threat as Wall Street Wavers

Wall Street futures declined after the Trump administration challenged the Federal Reserve's independence and proposed a credit card interest rate cap. Financial stocks stumbled amid concerns over the central bank's autonomy and potential interest rate cuts. Attention shifts to upcoming earnings and inflation reports influencing Fed decisions.

Wall Street futures took a hit on Monday amid renewed concerns over the Federal Reserve's independence, following the Trump administration's aggressive stance against the central bank. The administration's threat to indict Fed Chair Jerome Powell over his Congressional testimony added to the market's jitters.

Financial stocks suffered, particularly lenders and credit card firms, after President Trump proposed a one-year cap on credit card interest rates at 10%, starting January 20. Citigroup, JPMorgan Chase, and Bank of America saw notable declines in premarket trading, as did credit card lender American Express and other consumer finance firms.

Amid this turmoil, the focus now shifts to the upcoming U.S. consumer price inflation report, which is crucial for determining the Federal Reserve's next steps. Additionally, fourth-quarter earnings will be in the spotlight, starting with JPMorgan Chase's report on Tuesday. Despite these challenges, Fed policy is expected to remain data-driven, as assured by Goldman Sachs' Jan Hatzius.

(With inputs from agencies.)