US pre-open: Futures drop as Trump-Powell tensions escalate
By Benjamin Chiou
Date: Monday 12 Jan 2026
(Sharecast News) - US stocks were expected to pull back sharply on Monday, while safe-haven precious metals jumped, after the news that the Trump administration has launched a criminal probe into Federal Reserve chair Jerome Powell.
By 1121 GMT, the Dow and Nasdaq were trading 0.8% lower in pre-market activity, while S&P 500 futures were down 0.6%.
Markets were set to retreat after the Dow and S&P 500 both set new record highs on Friday, while the Nasdaq hit a two-month high, as investors digested a mixed bag of economic data, which included weaker-than-expected non-farm payrolls.
The dollar fell and equity futures dropped early on Monday as the long-running row between Trump and Powell escalated. The Fed chair said the Department of Justice had launched a criminal investigation into the $2.5bn renovation of the Fed's headquarters, and into his testimony about the project to the Senate banking committee in June last year.
"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation," Powell said in a video message.
The dollar also fell, while gold prices surged 2.2% to a new record of $4,600 an ounce, as investors sought "insulation from political risk", according to Nigel Green, chief executive of financial advisory Devere Group.
"Markets recognise a deeper issue here than a policy disagreement. Pressure on the central bank of the world's largest economy carries global consequences. Confidence in monetary governance in the United States anchors financial stability far beyond its borders. When that confidence weakens, capital moves quickly toward assets designed to exist beyond political reach," Green said.
Also weighing on sentiment was the rising conflict in Iran, amid speculation that Trump was considering military action against the country. Widespread protests were met with a violent crackdown by the Iranian authorities, leaving almost 500 people dead, according to human rights groups.
"We're looking at it very seriously," Trump said. "The military is looking at it, and we're looking at some very strong options. We'll make a determination," he told reporters on Sunday.
In company news, Abivax futures were up nearly 30% after reports emerged that Eli Lilly was preparing a €15bn bid for the Nasdaq-listed, Paris-based biotech firm.
Meanwhile, cyclical stocks were weaker across the board as heightened political risk raised economic concerns. Futures in the banking sector, in particular, were falling ahead of the opening bell, with Goldman Sachs, JPMorgan Chase & Co, Bank of America and Citigroup falling sharply.
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