Stocks looked set to tumble on Monday as investors worried about geopolitical tensions tied to the mass protests in Iran, as well as concerns about the Trump administration’s efforts to undermine the Federal Reserve’s independence.
Futures tracking the Dow Jones Industrial Average dropped 233 points, or 0.5%. S&P 500 futures fell 0.5% and contracts tied to the tech-heavy Nasdaq 100 slumped 0.8%. The Dow and S&P 500 hit record highs at the end of last week, but looked set to drop after political tensions ratcheted up over the weekend.
Meanwhile, precious metals surged as the fresh bout of uncertainty sent investors piling into haven assets. Gold futures rose 2.1% to $4,596 an ounce and silver futures jumped 6.1% to $84.22 an ounce.
The moves came after President Donald Trump said in a post on Truth Social Saturday that the U.S. “stands ready to help” the Iranian people after mass anti-government protests turned violent.
The Federal Reserve then revealed on Sunday that the Justice Department had sent it grand jury subpoenas, which Chair Jerome Powell said was part of Trump’s battle to force the central bank to lower interest rates.
The weekend’s developments will force the market to “grapple with fresh political turbulence and rising geopolitical risk,” said Hargreaves Lansdown analyst Matt Britzman.
“Sentiment has been shaken by news of a criminal probe into Fed Chair Jerome Powell and his claims of political pressure from the Trump administration, while unrest in Iran and talk of possible U.S. intervention add another layer of concern,” he added.
Plenty more market-moving events could happen this week. Consumer-price inflation data on Tuesday could help decide whether the Fed has any scope to lower borrowing costs, while the central bank’s Beige Book is due out on Wednesday.
The major Wall Street banks are also set to post their fourth-quarter earnings this week, kicking off a reporting season that could decide whether or not blue-chip stocks are able to maintain the lofty valuations they are currently trading at.
The yield on the benchmark 10-year Treasury note ticked up 2 basis points to 4.20% on Monday. The dollar slid 0.4% against a weighted basket