Daily Market Update: Powell Investigation Sends Stock Futures Lower While Bitcoin Holds Steady

TLDR

• DOJ launches criminal investigation into Federal Reserve Chair Jerome Powell over $2.5 billion headquarters renovation project
• Stock index futures fell Sunday night with Dow down 0.5%, S&P 500 down 0.6%, and Nasdaq down 0.9%
• Polymarket traders price only 8% probability Powell exits by March 31 despite investigation announcement
• Bitcoin trades near $91,400 and Ethereum holds $3,125 while gold jumps above $4,580 per ounce
• Prediction markets favor Kevin Warsh with 43% chance to become next Federal Reserve chair

Federal Reserve Chair Jerome Powell disclosed Sunday that the Department of Justice served grand jury subpoenas to the central bank. The criminal investigation focuses on the Federal Reserve’s $2.5 billion headquarters renovation.

Powell issued a rare video statement addressing the probe. He stated the DOJ action was an attack on central bank independence related to interest rate policies.

Stock index futures dropped following the announcement. Dow Jones futures fell 0.5% while S&P 500 futures declined 0.6%. Nasdaq 100 futures posted the largest drop at 0.9%.

The negative reaction followed strong market performance from the prior week. The S&P 500 and Dow Jones both reached new record highs on Friday. The S&P 500 climbed over 1% for the week.

The Dow advanced 2.3% and the Nasdaq gained 1.9% during the same period. Markets had been rallying on expectations of stable Federal Reserve policy.

Prediction Markets Signal Low Removal Probability

Traders on decentralized platforms show little concern about Powell’s early departure. Polymarket data indicates just 8% probability he resigns by March 31. The odds remained mostly unchanged after the investigation news broke.

Kalshi contracts tell a similar story. The regulated prediction market shows 19% probability Powell leaves before May 2026. Traders view his removal as unlikely despite the criminal probe.

A separate Polymarket contract gives 67% odds Powell exits the Fed Board by late May. This timeline aligns with the end of his current term as chair.

Cryptocurrency markets showed minimal reaction to the Powell news. Bitcoin traded near $91,400 with little price movement. Ethereum held steady above $3,125.

The stable crypto prices indicate traders aren’t expecting immediate monetary policy changes. Digital asset markets appear unconcerned about near-term Fed leadership shifts.

Gold Rallies While Stocks Retreat

Precious metals moved sharply higher on the news. Gold rose above $4,580 per ounce, gaining more than 1%. Silver jumped over 4.5% in Sunday trading.

The gold rally suggests some investors are positioning for potential Fed policy shifts. Traditional safe haven assets attracted buying interest while equities sold off.

Kevin Warsh leads betting markets to replace Powell as Fed chair. Polymarket assigns him 43% probability to take the position.

Warsh has written Wall Street Journal editorials calling for major Fed reforms. He advocates for reduced government spending and a smaller central bank balance sheet. His views align with calls for stricter price stability mandates.

Investors prepare for key economic releases this week. The consumer inflation report arrives Tuesday morning. Major banks including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley report quarterly earnings.

CME FedWatch tool shows 95% probability the Federal Reserve keeps rates unchanged. Friday’s December employment data showed labor market cooling without recession signals.

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