Wall Street ticked to more records Monday after shaking off worries about a worsening feud between the White House and the Federal Reserve, one that experts warned could lead to higher inflation in the future.
The S&P 500 added 0.2% to its prior all-time high set on Friday. The Dow Jones Industrial Average recovered an early loss of nearly 500 points and added 86 points, or 0.2%, to its own record, while the Nasdaq composite gained 0.3%.
Some nervousness remained, with investors watching the possibility that the Fed could become less independent in setting interest rates to keep inflation under control. Gold and other investments that tend to do well when investors are nervous rose, while the U.S. dollar dipped against other currencies.
In stock-specific moves, Walmart helped lift the broader U.S. market, climbing 3% after learning its stock will join the widely followed Nasdaq 100 index. Google also said Sunday it is expanding the shopping features in its AI chatbot by teaming up with Walmart and several other big retailers. Alphabet, Google’s parent company, rose 1% and pushed its total market value above $4 trillion after a torrid run tied to its artificial-intelligence offerings.
The report said the moves helped offset losses for a slight majority of stocks within the S&P 500. Leading the declines among major S&P 500 constituents were credit card companies, after President Donald Trump threatened steps that could eat into their profits.
Synchrony Financial fell 8.4%, Capital One Financial sank 6.4% and American Express dropped 4.3% after Trump said he wanted to put a 10% cap on credit card interest rates for a year.
A separate move involving Washington grabbed the most attention across financial markets: the weekend comments by Federal Reserve Chair Jerome Powell about the U.S. Department of Justice subpoenaing the Fed and threatening a criminal indictment over his testimony about renovations at its headquarters. In an unusual video statement released Sunday, Powell said his testimony and the renovations are “pretexts” for the threat of criminal charges, and he said the threat is “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
Powell’s comments came as the Fed remains locked in a feud with Trump, who has called for lower interest rates to make borrowing cheaper and spur the economy. The Fed did lower its main interest rate three times last year and indicated more cuts could arrive this year, but the central bank has proceeded deliberately enough that Trump has nicknamed Powell “Too Late.”
On Monday, White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell. The report noted the Fed has traditionally operated separately from the rest of Washington, with decisions made without having to bend to political whims.
In the bond market, the yield on the 10-year Treasury briefly rose to 4.21%, up from 4.18% late Friday, amid concerns that a less independent Fed could lead to higher inflation over the longer term. The yield later eased back to 4.18%.
Analysts said markets shook off the independence worry for several reasons, including the idea that political limits could restrict the White House’s ability to get its way. Thierry Wizman, a strategist at Macquarie Group, was quoted saying traders could see “a limitation to the White House’s success in getting its way” because Congress could deny confirmation of any nominees for the Fed from the White House. Sen. Thom Tillis, a Republican from North Carolina, said on social media he would oppose confirmation of any Fed nominee—including the upcoming Fed chair vacancy—until a legal matter is fully resolved.
The report also said the Fed’s rate-setting committee still seemed to be acting independently, despite Trump’s broader criticism and his attempt to fire Fed Gov. Lisa Cook. Brian Jacobsen, chief economist at Annex Wealth Management, said the new developments could encourage Powell to stay on at the Fed as a governor until his term expires in 2028, though Powell’s term as chair will end in May. Jacobsen suggested the move could deprive Trump of the ability to stack the board with another appointee.
Not all the day’s trading was tied to Fed politics. Abercrombie & Fitch dropped 17.7% after the retailer gave a forecasted range for profit in the final quarter of 2025 whose midpoint fell short of analysts’ expectations, and it also projected growth in revenue below Wall Street’s.
Other mall-focused apparel retailers also struggled, including drops of 12.3% for Urban Outfitters and 3.5% for American Eagle Outfitters.
All told, the S&P 500 rose 10.99 points to 6,977.27. The Dow added 86.13 to 49,590.20, and the Nasdaq composite gained 62.56 to 23,733.90. Gold rose 2.5% to a record settlement of $4,614.70 per ounce.
In stock markets abroad, indexes were mixed across Europe following a stronger showing in Asia. Stocks jumped 1.4% in Hong Kong and 1.1% in Shanghai for two of the world’s bigger gains after reports that Chinese leaders were preparing more help for the economy.