Wall St futures slip on worries over Fed independence; financial stocks slide

• Major banks dropped in premarket trading: Citigroup fell 4%, JPMorgan Chase declined 3%, and Bank of America slipped 2.5%
• Consumer finance firms were hit hardest, with Synchrony Financial, Bread Financial, and Capital One plunging between 10.5% and 11.6% on the proposed 10% credit card interest rate cap
• Fourth-quarter earnings season begins this week with JPMorgan Chase reporting Tuesday, while investors await Tuesday's U.S. consumer price inflation report for signals on Fed policy direction

SUMMARY

Wall Street futures declined Monday morning, with the Dow down 0.7%, S&P 500 down 0.7%, and Nasdaq down 0.9%, driven by dual concerns over Federal Reserve independence and proposed credit card interest rate caps.

Key Developments:

The Trump administration threatened to indict Fed Chair Jerome Powell over Congressional testimony regarding a renovation project, which Powell characterized as a "pretext" to influence interest rate policy. Trump has pressured for sharp rate cuts since taking office in January 2025. Additionally, the administration proposed capping credit card interest rates at 10% for one year starting January 20.

Market Impact:

Financial stocks tumbled in premarket trading:

• Major banks: Citigroup (-4%), JPMorgan Chase (-3%), Bank of America (-2.5%)
• Credit card issuers hit hardest: American Express (-4.8%), Synchrony Financial, Bread Financial, and Capital One (down 10.5%-11.6%)

Other Notable Moves:

Walmart gained 3.3% ahead of its January 20 inclusion in the Nasdaq-100 index following its recent NYSE-to-Nasdaq migration. Exxon Mobil's shares fell after Trump threatened to ban the company from investing in Venezuela.

Looking Ahead:

Fourth-quarter earnings season begins Tuesday with JPMorgan Chase reporting. Tuesday's U.S. consumer price inflation data will be critical for assessing the Fed's policy trajectory. Multiple investment banks, including J.P. Morgan, Barclays, and Goldman Sachs, recently pushed back their U.S. rate hike forecasts following strong labor market data.

Goldman Sachs' Jan Hatzius noted heightened Fed independence concerns but expects policy decisions to remain unaffected.