US stock markets opened with significant losses on Monday as investors reacted to news that Federal Reserve Chair Jerome Powell received subpoenas from the Department of Justice. The development sent shockwaves through Wall Street, triggering broad-based selling across major indices.

Market Performance

The major US indices posted substantial declines in early trading:

The Dow Jones hit its session low shortly after the opening bell, marking a significant retreat from the previous day's close. The broader market selloff reflected investor concerns about potential regulatory uncertainty surrounding the Federal Reserve leadership.

DOJ Investigation Details

The Department of Justice served Powell with subpoenas on Friday, with warnings of potential criminal indictment. The investigation centers on testimony Powell provided before the Senate Banking Committee in June regarding the Federal Reserve's headquarters renovation project.

The renovation project involves the Federal Reserve's historic Washington headquarters, representing a substantial capital investment for the central bank.

Powell's Response and Political Context

Powell has publicly characterized the DOJ's actions as politically motivated, suggesting the investigation may be influenced by broader political considerations rather than substantive legal concerns. The Fed Chair has experienced ongoing tensions with the current administration over monetary policy decisions.

The conflict primarily stems from disagreements over interest rate policy, with the administration calling for accelerated rate cuts while the Federal Reserve has maintained a more measured approach to rate reductions. This policy divergence has created friction between the executive branch and the independent central bank.

Market Implications

The market reaction underscores investor sensitivity to potential disruptions in Federal Reserve leadership and monetary policy continuity. The subpoenas introduce an element of regulatory uncertainty that traders are closely monitoring for potential impacts on future policy decisions.

As this remains a developing story, market participants will likely continue tracking developments in the DOJ investigation and any potential implications for Federal Reserve operations and leadership stability.

US stocks have opened 2026 with remarkable strength, building on three consecutive years of double-digit gains, but face critical tests in the coming days as corporate earnings season begins and fresh inflation data arrives. The S&P 500 has already climbed nearly 2% in January 2026, extending the momentum from 2025's strong performance that marked the third straight year of double-digit percentage gains for the benchmark index.

Major Bank Earnings Launch Q4 Results Season

The fourth-quarter earnings season kicks off this week with major financial institutions leading the charge. JPMorgan Chase, the largest US lender, reports results on Tuesday, followed by Citigroup, Bank of America, and Goldman Sachs later in the week. Financial sector performance will be closely scrutinized as analysts expect earnings growth of approximately 7% in the fourth quarter compared to the year-earlier period.

Bank results will provide crucial insights into consumer health, particularly regarding credit card payment defaults, given that consumer spending accounts for more than two-thirds of economic activity. Portfolio managers view financial institutions as being "on the front lines" of economic trends, making their quarterly performance a key indicator of broader market conditions.

Earnings Growth Projections Support Market Optimism

Analyst expectations remain robust for corporate America's profit performance. According to LSEG IBES data, overall earnings from S&P 500 companies are estimated to have climbed 13% in 2025, with projections for further growth exceeding 15% in 2026. This strong profit outlook serves as a fundamental support for the ongoing bull market, now in its fourth year.

December CPI Data Adds Policy Uncertainty

Tuesday's release of December's Consumer Price Index will provide critical inflation insights ahead of the Federal Reserve's next monetary policy meeting at the end of January. The data carries heightened significance as it represents one of the last key economic releases before Fed officials convene to discuss interest rate policy. The US central bank lowered rates in each of its final three meetings of 2025 in response to a weakening labor market, but the timing of future cuts remains uncertain.

Investors have faced challenges getting a complete economic picture due to the 43-day government shutdown late last year, which delayed or canceled key reports. With data flow now returning to normal, the December CPI release takes on added importance for monetary policy direction.

Market Resilience Despite Geopolitical Tensions

Despite an increasingly volatile geopolitical landscape, including recent military operations and international tensions, US stocks have demonstrated remarkable resilience. The Cboe Volatility Index remained near its 2025 low points as of Friday, suggesting markets have become somewhat desensitized to geopolitical events. However, investment strategists caution that current market conditions may be "priced near perfection," warranting consideration of defensive positioning.

Investors continue to point to three key factors supporting the bull market: strong corporate profit outlook, easing monetary policy, and anticipated fiscal stimulus. Fed easing has contributed to "a sense of calm to risk markets," though future policy direction will depend heavily on inflation trends and economic data in the coming weeks.