Wall Street's Bumpy Ride: Markets Rise Despite Political Tensions

Wall Street saw a rebound on Monday, with major indexes reaching new highs. The S&P 500 added 0. 2% to its previous record, while the Dow Jones Industrial Average recovered from an early loss of nearly 500 points to gain 86 points. The Nasdaq composite also saw a 0. 3% increase. However, the market wasn't entirely smooth sailing. Concerns about the Federal Reserve's independence from political influence lingered. Investors worried that the Fed might not be able to control inflation effectively if it comes under too much pressure from the White House. This uncertainty caused the value of the U. S. dollar to dip against other currencies, while safe-haven assets like gold saw gains. Walmart's stock got a boost after it was announced that the retailer would join the Nasdaq 100 index. This news, combined with Google's plans to expand its shopping features through a partnership with Walmart and other retailers, helped drive the market higher. Google's parent company, Alphabet, saw its market value surpass $4 trillion, thanks in part to its AI offerings. But not all stocks fared well. Credit card companies took a hit after President Trump proposed a 10% cap on credit card interest rates for a year. Synchrony Financial, Capital One Financial, and American Express all saw significant drops in their stock prices.The market's attention was also focused on the growing feud between the Federal Reserve and the White House. Fed Chair Jerome Powell released a video statement over the weekend, saying that the U. S. Department of Justice had subpoenaed the Fed and threatened criminal indictment over his testimony about renovations at its headquarters. Powell suggested that this was really about the Fed's independence in setting interest rates, rather than following the President's preferences. The Fed has traditionally operated independently from political influence, which allows it to make decisions that might not be popular in the short term but are necessary for long-term economic stability. For example, it might raise interest rates to control inflation, even if that slows down the economy and frustrates politicians. Analysts noted that the market's rebound could be due to several factors. Traders might believe that the White House's attempts to influence the Fed will be limited, as Congress could refuse to confirm any nominees put forward by the White House. Additionally, this latest move could encourage Powell to stay on at the Fed until his term expires in 2028, even though his term as chair will end in May. Retailers also saw some volatility. Abercrombie & Fitch's stock dropped 17. 7% after the company's forecast for profit in the final quarter of 2025 fell short of analysts' expectations. Other mall-based retailers, like Urban Outfitters and American Eagle Outfitters, also saw declines. In the bond market, the yield on the 10-year Treasury briefly rose to 4. 21% before easing back to 4. 18%. Meanwhile, the price of gold rose 2. 5% to a record settlement of $4, 614. 70 per ounce.