The Dow Jones Industrial Average was down 179 points, or 0.4%, as of 10 a.m. Eastern time, and the Nasdaq composite was nearly unchanged.
Some of the market's sharpest drops came from credit-card companies, as Synchrony Financial, Capital One Financial and American Express all fell between 4% and 7%. They sank after Trump said he wanted to put a 10% cap on credit-card interest rates for a year. Such a move could eat into profits for credit card companies.
But it was a separate move by Trump that was grabbing more attention on Wall Street. Over the weekend, the Federal Reserve's chair, Jerome Powell, said the U.S. Department of Justice subpoenaed the Fed and threatened a criminal indictment over his testimony about renovations underway at its headquarters.
With an unusual video statement released on Sunday, Powell said his testimony and the renovations are “pretexts” for the threat of criminal charges, which is really “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
The Fed has been locked in a feud with the White House about interest rates. Trump has been loudly calling for lower interest rates, which would make borrowing cheaper for U.S. households and companies and could give the economy a kickstart.
The Fed did cut its main interest rate three times last year and has indicated more cuts may be arriving this year. But it’s been moving slowly enough that Trump has nicknamed Powell “Too Late.”
In a brief interview with NBC News Sunday, President Donald Trump insisted he didn’t know about the investigation into Powell. When asked if the investigation is intended to pressure Powell on rates, Trump said, “No. I wouldn’t even think of doing it that way.”
Powell’s term as chair ends in May, and Trump administration officials have signaled that he could name a potential replacement this month. Trump has also sought to fire Fed governor Lisa Cook.
The Fed has traditionally operated separately from the rest of Washington, making its decisions on interest rates without having to bend to political whims. Such independence, the thinking goes, gives it freedom to make unpopular moves that are necessary for the economy’s long-term health.
Keeping interest rates high, for example, could slow the economy and frustrate politicians looking to please voters. But it could also be the medicine needed to get high inflation under control.
In the bond market, the yield on the 10-year Treasury ticked up to 4.19% from 4.18% late Friday. A less independent Fed and higher inflation in the long term could also erode the value of the U.S. dollar, and it slipped 0.3% against the euro and 0.4% against the Swiss franc.
In stock markets abroad, indexes rose across much of Europe and Asia. Stocks jumped 1.4% in Hong Kong and 1.1% in Shanghai for two of the world’s bigger gains following reports that Chinese leaders were preparing more help for the economy.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.