On January 12, 2026, major U.S. stock indexes fell, with the S&P 500 down 0.23%, the Dow Jones down 0.58%, and the Nasdaq 100 down 0.27%. The decline is attributed to increased tensions between the Trump administration and the Federal Reserve regarding monetary policy, prompting a sell-off in various sectors including U.S. stocks, government bonds, and the dollar.
Fed Chair Jerome Powell revealed that the Fed faced grand jury subpoenas from the Justice Department, risking criminal indictments tied to his congressional testimony. Additionally, President Trump threatened that credit card companies would be in violation of the law if they did not cap interest rates at 10% for one year, leading to significant declines in financial stocks like Synchrony Financial and Capital One.
In market forecasts for the upcoming week, the December CPI is expected to remain at 2.7% year-over-year, while new home sales are projected to drop by 10.6% month-over-month to 715,000. The equity market is currently discounting a 5% chance of a 25 basis point rate cut in the Federal Reserve’s forthcoming meeting on January 27-28.
