Markets slip after DOJ opens criminal inquiry into Fed chair Jerome Powell

Stocks, the dollar and U.S. government bonds fell on Monday after federal prosecutors opened a criminal investigation into Jerome H. Powell, the chair of the Federal Reserve, and gold reached a fresh record high as investors reacted to the news. The S&P 500 was set to open about 0.6 percent lower in premarket trading, an index of the dollar against major currencies dropped 0.5 percent and the yield on 10-year Treasury debt rose, approaching 4.2 percent.

Gold rose above $4,600 an ounce, the Times reported. Mr. Powell issued a rare video response saying the Justice Department had served the central bank with grand jury subpoenas and that he would carry out his duties "without political fear or favor." The Fed has faced pressure from President Trump and his allies to cut interest rates, reviving last year’s so-called "sell America" trade, and analysts warned the episode has raised concerns about Fed independence.

Market participants are watching upcoming U.S. inflation data due Tuesday — economists expect consumer prices to have risen 2.7 percent in December from a year earlier, the same rate as November — and observers noted uncertainty over how Fed policy might evolve. Jane Foley of Rabobank said Fed independence was a considerable market concern, while other strategists warned of risks if policy turned more accommodative; Mr.

Key Topics

Business, Jerome Powell, Federal Reserve, Justice Department, Gold