Credit Card Stocks Plunge as Trump Proposes Interest Rate Cap Amid Fed Tensions
Credit card stocks tumbled 4-7% after Trump proposed a 10% interest rate cap, while broader markets showed mixed performance with the S&P 500 down 0.1% and Dow falling 179 points. Fed Chair Powell revealed Justice Department subpoenas and criminal indictment threats over headquarters renovation testimony, which he called pretexts for pressure over interest rate independence. The dollar weakened against major currencies amid concerns about Fed autonomy and inflation control.
*this image is generated using AI for illustrative purposes only.
Credit card companies faced sharp declines on Monday after President Trump announced plans to implement a 10% cap on credit card interest rates, while broader market tensions emerged from escalating disputes between the White House and Federal Reserve over monetary policy independence.
Credit Card Sector Under Pressure
The financial sector experienced significant volatility as major credit card companies absorbed the impact of Trump's proposed interest rate limitations. The announcement sent shockwaves through the industry, with investors anticipating potential profit margin compression.
| Company | Stock Performance |
|---|---|
| Synchrony Financial | Down 4-7% |
| Capital One Financial | Down 4-7% |
| American Express | Down 4-7% |
The proposed one-year cap on credit card interest rates at 10% represents a direct challenge to the current pricing models of major credit card issuers, potentially forcing significant adjustments to their revenue structures.
Mixed Market Performance
Broader market indices displayed mixed signals amid the financial sector turbulence and ongoing political tensions. The market's reaction reflected uncertainty about potential policy changes and their economic implications.
| Index | Performance | Points Change |
|---|---|---|
| S&P 500 | Down 0.1% | From all-time high |
| Dow Jones Industrial Average | Down 0.4% | -179 points |
| Nasdaq Composite | Nearly unchanged | Minimal movement |
Fed-White House Tensions Escalate
Federal Reserve Chair Jerome Powell revealed that the Justice Department had subpoenaed the Fed and threatened criminal indictment over his testimony regarding headquarters renovations. In an unusual video statement released Sunday, Powell characterized these actions as "pretexts" for the real issue: pressure over the Fed's interest rate decisions.
Powell emphasized that the Fed sets interest rates "based on our best assessment of what will serve the public, rather than following the preferences of the President." The Fed has maintained its traditional independence from political influence, making monetary policy decisions without bending to political pressures.
Currency and Bond Market Reactions
Concerns about Fed independence and potential long-term inflation impacts affected currency and bond markets. The U.S. dollar weakened against major currencies, while Treasury yields showed modest increases.
| Market | Movement | Details |
|---|---|---|
| USD vs Euro | Down 0.3% | Weakening dollar |
| USD vs Swiss Franc | Down 0.4% | Continued decline |
| 10-Year Treasury Yield | Up to 4.19% | From 4.18% Friday |
Global Market Performance
International markets showed more positive momentum, particularly in Asia where Chinese markets gained on reports of potential economic stimulus measures.
| Market | Performance | Catalyst |
|---|---|---|
| Hong Kong | Up 1.4% | China stimulus reports |
| Shanghai | Up 1.1% | Economic support expectations |
| European Markets | Generally positive | Mixed regional factors |
The contrasting performance between U.S. and international markets highlighted the specific nature of domestic political and monetary policy concerns affecting American financial markets.
15
