Walmart will join the Nasdaq-100 index on Jan. 20, a shift that could take billions of dollars out of passive index funds.Stocks opened lower after the Powell news. The Justice Department’s threat of a lawsuit, apparently aimed at comments Powell made in Congress about a building renovation project, increased concerns about the Fed’s independence.
Powell called the move a “pretext” to gain more influence over interest rates, which President Donald Trump has wanted to cut sharply since taking office in January 2025.
“The news that Powell is being investigated by the Justice Department was essentially telegraphed by Trump, and so I think the market is watching this closely for now,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The fact that former Fed governors supported Powell is also reassuring for markets,” he said. Investors are also looking ahead to the U.S. fourth-quarter earnings season, Cardillo said.
According to LSEG data, analysts believe the technology sector will lead earnings growth in the S&P 500 this quarter, with a 26.5% annualized gain. They expect total profits for S&P 500 companies to rise 8.8% this quarter from a year ago. The reporting period unofficially begins Tuesday with results from JPMorgan Chase and other major banks.
The Dow Jones Industrial Average rose 86.13 points, or 0.17%, to 49,590.20, the S&P 500 gained 10.99 points, or 0.16%, to 6,977.27 and the Nasdaq Composite gained 62.56 points, or 0.26%, to 23,733.90.
Shares of lenders and credit card companies came under pressure after Trump called for a one-year ceiling on credit card interest rates of 10% from January 20.
Financials fell 0.8% on the day, leading to sector declines in the S&P 500.
Citigroup fell 3%, while credit card company American Express fell 4.3%. Consumer finance companies also fell, including Capital One, which ultimately fell 6.4%.
Buy-now, pay-later firm Affirm Holdings fell 6.6%. Investors are also awaiting Tuesday’s U.S. Consumer Price Index report, which could impact the outlook for Fed rate cuts. For now, according to LSEG data, markets are betting on at least two more quarter-point cuts before the end of the year.
Volume on U.S. exchanges was 17.29 billion shares, compared to the full-session average of 16.40 billion over the past 20 trading days.
On the NYSE, advancing issues outnumbered declining issues by a ratio of 1.68 to 1. There were 725 new highs and 48 new lows on the NYSE.
On the Nasdaq, 2,613 stocks rose and 2,144 fell as advancing issues outnumbered declining stocks by a 1.22-to-1 ratio. (Additional reporting by Medha Singh and Pranav Kashyap in Bengaluru; Editing by Maju Samuel and David Gregorio)
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