Markets not Panicking Over Trump’s Threats Against Powell

As news of the Justice Department’s investigation into Federal Reserve Chair Jerome Powell broke, market watchers braced for a sharp reaction, with analysts warning that global investors could rethink their faith in US institutions, Forbes Daily reported.

Pressure on the Fed does not automatically hurt stocks.

Instead, markets barely flinched. The S&P 500, Dow Jones Industrial Average and Nasdaq all finished higher on the day.

Trump has sparred with Powell before, and little came of it. Courts recently blocked an attempt to remove Fed Governor Lisa Cook.

Two Republican senators—Lisa Murkowski of Alaska and Thom Tillis of North Carolina—have said they would block any new Federal Reserve nominee until the Justice Department investigation is resolved, suggesting institutional guardrails remain in place.

Another reason for the muted reaction is historical precedent. Pressure on the Fed does not automatically hurt stocks.

Evidence comes from the Fed–President Pressure Index (FPPI), created by Yosef Bonaparte, a professor of finance at the University of Colorado Denver. The index measures how much public pressure presidents place on the Federal Reserve and how markets respond.

Market swings tend to increase when pressure rises, reflecting uncertainty rather than panic. “Pressure adds volatility, but not necessarily lower returns,” Bonaparte said.