Apparently the bar for killing a rally in 2026 is much higher than “DOJ opens a criminal probe into the Fed Chair.”

Because on Monday, while the Department of Justice (read: Trump’s henchmen) decided to spice things up by opening a criminal investigation into Jerome Powell, somehow, the S&P 500 notched another fresh all-time high.

At one point, traders looked like they were ready to put down their guns and retreat. The S&P was down about 0.5% at the lows… while the Dow lost 1.3%.

Then… no one knows what, but something happened. By the close, the S&P clawed its way back into the green (+0.2%), the Nasdaq tacked on another 0.5%, and the Dow (which was getting beat like a red-headed-stepchild earlier in the day) did the full undertaker meme (+.07%). Translation: Wall Street decided that Federal Reserve independence is tomorrow’s problem.

So wtf did J-Money do this time? Well, the drama kicked off last night when Powell confirmed (via an unusually direct video statement) that federal prosecutors had opened a criminal investigation tied to his Senate testimony about the Fed’s building renovation project. (Somewhere, a contractor just deleted his emails).

Immediately Powell went into victim mode “I’m innocent you’re honor.” He called the probe another escalation in Donald Trump’s campaign to pressure the central bank and made it clear he’s not playing ball.

Translation: I’m not f***ing leaving.

Markets briefly freaked out about the obvious implication here (political pressure on monetary policy) but then remembered a very important thing: Powell’s term ends in May anyway.

Traders essentially called bluff on the DOJ’s investigation actually changing interest rates whatsoever… especially since we’ll have a new Fed chairman before all the whales hit the beaches (in swimsuits they should be arrested for wearing).

That said, while most equities found their footing, bank stocks absolutely did not.

Of course, this had nothing to do with JPow renovating Fed headquarters with 10 infinity pools and enough government funded strippers to fill up Michigan Stadium (allegedly).

Bank stocks took a dive after Trump threatened to cap credit card rates at 10% for a year… much lower than the numbers banks prefer to hide in microscopic font.

Capital One cratered roughly 6-7%, Citigroup sank about 3%, and JPMorgan Chase along with Bank of America slid around 2% as investors priced in a whole lot less profit and a whole lot more regulations. Bank earnings season hasn’t even started yet and lenders are already in timeout.

If you’re looking for where fear actually showed up, it was in gold.

Gold futures jumped about 2% as traders hedged against the idea of a politically compromised Fed suddenly deciding rate cuts > inflation worries.

Walmart quietly carried part of the rebound, rising 2% in anticipation of its Nasdaq-100 inclusion. Target deserves a nod too… mostly for showing the Walton family exactly what to replicate.

All of this sets the stage for this week’s inflation data, with December CPI dropping tomorrow.

After Friday’s jobs report showed continued cooling, markets are overwhelmingly betting the Fed stays put this month… and cuts later. The Powell circus hasn’t changed that calculus… yet. So make sure to keep an eye on that.

Until something actually breaks (or Powell gets frog-marched out of Constitution Avenue), traders are keeping their foot on the gas… while cautiously asking each other on Twitter whether they should be buying the dip in bank stocks. (Probably.)

If you read all of this, congrats for having a 10 second attention span (better than me). As always, here’s our heatmap for today.

Market Gossip

>Meta names former Trump adviser Dina Powell McCormick as president and vice chairman (AP News): Zuck’s speedrun from far-left darling to right-wing ally deserves a Harvard case study.

>Capital One, Amex Shares Sink on Trump’s Credit-Card Threat (Bloomberg): Wall Street pricing in the risk of a cap on legal loan sharking.

>Nvidia, Eli Lilly announce $1 billion investment in AI drug discovery lab (Yahoo Finance): Jensen Huang found another industry to invoice.

>Insiders At Robinhood Markets Sold US$118m In Stock, Alluding To Potential Weakness (Simply Wall Street): Looks like Kalshi and Polymarket may have stolen Vlad’s degenerate gambling juice… and insiders are jumping ship.

At the time of publishing this article, Stocks.News holds positions in Meta and Robinood as mentioned in the article.