Background on Jerome Powell and the Federal Reserve
Jerome Powell, the President of the Federal Reserve (Fed), is a key figure in the U.S. financial landscape. As the head of the central bank, Powell plays a crucial role in setting monetary policy and maintaining financial stability. His recent announcement of facing a federal investigation has sent ripples through Wall Street.
Market Reaction to Powell’s Investigation
On Monday, the three major indices on Wall Street – the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite – all experienced a decline. This cautious market behavior follows Powell’s revelation about the federal investigation related to his congressional testimony on the renovation of the Fed’s headquarters. Powell perceives this investigation as potential government pressure to lower the key interest rate further.
Rise in Mining Stocks
The news of the investigation has spurred a surge in mining stocks. As investors anticipate possible interest rate cuts, the prices of metals have risen. Gold reached new historical highs, and mining companies like Newmont (+3.87%) and Southern Copper (+3.87%) have seen significant gains.
Decline in Financial Stocks
On the other hand, financial stocks have taken a hit. This is primarily due to President Donald Trump’s proposal from the previous week to cap credit card interest rates at 10% a year starting January 20. This move would severely impact banks’ primary income source – credit card interest.
- Question: Jerome Powell is the President of the Federal Reserve, a critical figure in U.S. monetary policy. His investigation signifies potential government pressure to lower interest rates, causing market uncertainty.
- Question: The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all experienced a decline following Powell’s announcement.
- Question: Mining stocks, particularly those of gold and copper miners like Newmont and Southern Copper, saw significant growth.
- Question: Financial stocks, including banks like JP Morgan, Bank of America, and Wells Fargo, as well as credit card companies such as American Express and MasterCard, experienced a decline.
