Stocks loiter, gold stands firm as Trump pursues central banker

By Isla Binnie and Marc Jones

Jan 12 (Reuters) – Wall Street steadied after early losses and the dollar fell, while gold hit a new high on Monday as the Trump administration’s threat to indict Federal Reserve Chair Jerome Powell renewed questions about the future independence of the world’s most influential central bank.

Powell delivered an unusually full-throated rejection of the Department of Justice’s service of grand jury subpoenas, adding to what Morgan Stanley analysts called a “cacophony of market-moving events” to start what is only the second full week of 2026.

Trump’s statement that he was considering military action after a crackdown on protests in Iran added further potential tension following the capture of Venezuela’s Nicolas Maduro and suggestion the U.S. could try to acquire Greenland.

The three main Wall Street indexes slipped in early trading but the benchmark S&P 500 and the tech-heavy Nasdaq Composite later flirted with positive territory.

While the Dow Jones Industrial Average stayed down 0.12%, the S&P 500 rose 0.07%, and the Nasdaq Composite rose 0.33%, both close to record highs.

“The market is used to a lot of back-and-forth in terms of suggested policy and suggested policy changes. We need to see some type of action before the market will actually react to it in a meaningful way,” said Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners.

The dollar index, measured against a basket of major currencies, fell 0.37% to 98.87, with the euro up 0.28% at $1.167.

“This just ended the dollar’s New Year bounce,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The subpoenas have probably overwhelmed the geopolitics.”

Gold enjoyed its safe-haven status and rose 2.38% to $4,617 an ounce, having hit a record high of $4,627 earlier in the session. Silver also rose. [GOL/]

 Oil prices held on to a near five-week high as a crackdown on anti-government protests in Iran raised fears of export disruption, outweighing prospects for more supply from Venezuela following U.S. intervention in that OPEC member, whose oil exports have long been bound by sanctions. [O/R] 

U.S. crude rose 0.22% to $59.25 a barrel and Brent rose 0.41% to $63.61 per barrel. Both benchmarks had closed last week at their highest levels since December 5.

CREDIT CARD RATE CAP RATTLES INVESTORS

Stock in lenders and credit card firms fell harder than other sectors, after Trump’s call on Friday for a one-year cap on credit card interest rates at 10% starting on January 20.

Citigroup fell more than 3%. Bank of America fell nearly 2%, JPMorgan Chase more than 2% and US Bancorp 2.5%. Finance firms Synchrony Financial and Capital One fell hard but recovered slightly to be quoted both down over 6%. [.N]

“Based on very preliminary calculations, Citi would have the highest hit and next US Bancorp,” JPMorgan analysts said in a note, explaining that US Bancorp “has credit card loans with higher rates, implying that it has more subprime customers”. 

Closely watched developments this week include U.S. inflation data, trade figures from China and a slew of U.S. earnings beginning with JPMorgan and BNY on Tuesday.

The dramatic escalation in the fight between Powell and Trump, which dates back to the banker’s first years as chair in 2018, will likely stay front and center.

“Trump is pulling at the loose threads of central bank independence,” said Andrew Lilley, chief rates strategist at Barrenjoey, an investment bank based in Sydney.

“Investors won’t be happy about it, but it shows actually Trump has no other levers to pull. The cash rate will stay what the majority of the FOMC wants them to be.”

Deutsche Bank analysts totted up the various factors markets will have to weigh. “(R)emarkable stuff and all in all plenty of opportunities for big headlines over the coming days,” they said in a note.

(Additional reporting by Karen Brettell, Scott DiSavino, Medha Singh, Pranav Kashyap, Tom Westbrook and Ankur Banerjee; Editing by Alexander Smith, Chizu Nomiyama and Andrea Ricci)