SHOCKING: Is Fed Chair Powell's Job at Risk? DOJ Launches Criminal Probe – What This Means for Your Investments!

U.S. stocks faced turbulence on Monday, retreating from last week's record highs amid growing unease over the independence of the Federal Reserve. The Dow Jones Industrial Average (^DJI) fell by 0.2%, while the S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) remained relatively flat after reaching all-time closing highs. Initially starting the session in the red, the indexes managed to pare some losses as the morning progressed.

This market unease was triggered by the announcement that U.S. prosecutors have opened a criminal investigation into Fed Chair Jerome Powell. The Justice Department's decision to issue subpoenas related to Powell's testimony regarding building renovations has raised alarms about potential criminal charges. In a strongly worded statement, Powell criticized the actions as an escalation of former President Trump's ongoing efforts to coerce the Fed into cutting interest rates.

"The threat of criminal charges is 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," Powell stated, dismissing the concerns cited in the subpoenas as "pretexts."

This development marks a significant chapter in the ongoing struggle between the White House and the Federal Reserve. Analysts fear that the implications of this investigation could lead to increased political interference in monetary policy, a concern that has already caused gold prices to soar to record levels and the dollar to drop to its lowest point in three weeks.

In the corporate sector, shares of major banks and financial services companies dropped sharply following Trump's warning to credit card issuers. He indicated that lenders could be "in violation of the law" if they do not cap interest rates at 10%. Capital One (COF) led the losses with a 7% decline, while Citi (C) and JPMorgan (JPM) also saw their shares dip at the start of a week that is set to kick off earnings season for major U.S. banks.

The unsettling atmosphere in the markets is compounded by the anticipation of this week's inflation updates, as the Consumer Price Index (CPI) reading is expected on Tuesday. Following December’s jobs report, which showed a cooling labor market without signaling a sharp economic slowdown, investors largely ruled out a rate cut from the Fed this month.

Additionally, Wall Street is keeping a close watch on developments in Iran, where public unrest is escalating toward potential revolution. President Trump has hinted at military action as a response to government crackdowns on protests, leading to fluctuations in oil prices as investors assess the potential impact on crude supply.

As the markets navigate these significant developments, the interplay between political maneuvering and economic stability will be crucial for investors. The heightened scrutiny of the Fed's independence raises fundamental questions about the future of U.S. monetary policy and its capacity to act independently of political pressures.

Investors are advised to stay alert as the week unfolds, particularly with major earnings reports and crucial inflation data on the horizon that could further influence market sentiment. The uncertainty surrounding the Fed's position, combined with shifting political landscapes, continues to create a complicated environment for U.S. equities.