Wall Street ticks to records after shaking off worries about Trump's
feud with the Fed
[January 13, 2026] By
STAN CHOE
NEW YORK (AP) — Wall Street ticked to more records Monday after bouncing
back from losses taken because of worries about the worsening feud
between the White House and the Federal Reserve, one that experts warn
could lead to higher inflation in the future.
The S&P 500 tacked 0.2% onto its prior all-time high set on Friday. The
Dow Jones Industrial Average recovered an early loss of nearly 500
points and added 86, or 0.2%, to its own record, while the Nasdaq
composite gained 0.3%.
Some nervousness was still evident in the market, though, amid concern
that the Fed may be on the path to less independence in setting interest
rates to keep inflation under control. Prices for gold and other
investments that tend to do well when investors are nervous rose, while
the value of the U.S. dollar dipped against other currencies.
Walmart helped drive the U.S. stock market higher despite the worries.
It climbed 3% after learning that its stock will join the widely
followed Nasdaq 100 index. Google also said Sunday that it’s expanding
the shopping features in its AI chatbot by teaming up with Walmart and
several other big retailers.
Google’s parent company, Alphabet, rose 1% to bring its total market
value above $4 trillion following a torrid run aided by its
artificial-intelligence offerings.
They helped offset losses for a slight majority of stocks within the S&P
500. Leading them all were credit card companies after President Donald
Trump threatened moves that could eat into their profit.
Synchrony Financial fell 8.4%, Capital One Financial sank 6.4% and
American Express dropped 4.3%. They weakened after Trump said he wanted
to put a 10% cap on credit card interest rates for a year.
But it was a separate move involving Washington that grabbed the most
attention across financial markets. Over the weekend, the Federal
Reserve’s chair said the U.S. Department of Justice subpoenaed the Fed
and threatened a criminal indictment over his testimony about
renovations at its headquarters.
Through an unusual video statement released on Sunday, Fed Chair Jerome
Powell said his testimony and the renovations are “pretexts” for the
threat of criminal charges, which he said 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 Trump, who has loudly called for
lower interest rates to make borrowing cheaper for U.S. households and
companies and give the economy a kickstart. The Fed did lower its main
interest rate three times last year and indicated more cuts may arrive
this year, but it’s moved deliberately enough that Trump has nicknamed
Powell “Too Late.”
White House press secretary Karoline Leavitt told reporters Monday that
Trump did not direct his Justice Department to investigate Powell.
The Fed has traditionally operated separately from the rest of
Washington, making its decisions without having to bend to political
whims. Such independence, the thinking goes, gives it the freedom to
keep interest rates high when necessary to drive down high inflation,
even if it slows the economy and frustrates politicians looking to
please voters.
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Ravi Kumaraswami, center, Riskified President of Worldwide Field
Operations., gavels trading closed at the New York Stock Exchange,
Monday, Jan. 12, 2026. (AP Photo/Richard Drew)
 In the bond market, the yield on the
10-year Treasury briefly rose to 4.21%, up from 4.18% late Friday,
amid concerns that a less independent Fed could lead to higher
inflation over the longer term. But it later eased back to 4.18%.
The worries also hit the value of the U.S. dollar, which slipped
0.4% against the euro and 0.6% against the Swiss franc.
Analysts said financial markets shook off the concerns about the
Fed’s independence for several potential reasons. Traders could see
“a limitation to the White House’s success in getting its way,”
according to Thierry Wizman, a strategist at Macquarie Group,
because Congress could deny confirmation of any nominees for the Fed
from the White House.
“It is now the independence and credibility of the Department of
Justice that are in question,” Sen. Thom Tillis, a Republican from
North Carolina, said on social media. “I will oppose the
confirmation of any nominee for the Fed—including the upcoming Fed
Chair vacancy—until this legal matter is fully resolved.”
Trump has already criticized the Fed sharply, and he’s trying at the
moment to fire Fed Gov. Lisa Cook, but the Fed’s rate-setting
committee still seems to be acting independently.
Plus, this latest move could encourage Powell to stay on at the Fed
as a governor until his term expires in 2028, even though his term
as chair will end in May, said Brian Jacobsen, chief economist at
Annex Wealth Management.
“With the political pressure on the Fed, he may choose to stay on as
a governor out of spite,” he said. “It would deprive President Trump
of the ability to stack the board with another appointee.”
On Wall Street, Abercrombie & Fitch dropped 17.7% after the retailer
gave a forecasted range for profit in the final quarter of 2025
whose midpoint fell short of analysts’ expectations. Its forecast
for growth in revenue also fell shy of Wall Street’s.
Other retailers that sell clothes in malls also struggled, including
drops of 12.3% for Urban Outfitters and 3.5% for American Eagle
Outfitters.
All told, the S&P 500 rose 10.99 points to 6,977.27. The Dow Jones
Industrial Average added 86.13 to 49,590.20, and the Nasdaq
composite gained 62.56 to 23,733.90.
The price of gold rose 2.5% to a record settlement of $4,614.70 per
ounce
In stock markets abroad, indexes were mixed across Europe following
a stronger showing in 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.
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