**Markets React to Powell Probe, But Indices Hold Strong Near Record Highs**

U.S. stock futures slipped slightly as investors digested surprising news: the Department of Justice has launched a criminal investigation into Federal Reserve Chairman Jerome Powell. This raised fresh concerns about political interference in central bank decisions, which could impact how and when interest rates are changed. Despite this, major indexes remained close to record highs.

Last week saw strong gains across the board. The S&P 500 climbed 1.1% to 6,966, the Nasdaq 100 added 1.2% to reach 25,766, and the Dow surged 2.1% to a new all-time high of 49,504. Small-cap stocks led the rally, with the Russell 2000 jumping 4.3% to 2,624, boosted by strength in homebuilders and cyclical sectors. However, the probe into Powell could reshape expectations for future Fed rate moves, especially with political pressure now looming large.

**Tech and Chip Stocks Rally on Government Support**

Intel stock soared 10.8% after former President Trump praised the company following a meeting with CEO Lip-Bu Tan. Trump highlighted the U.S. government’s investment in Intel, sparking renewed investor interest. This helped lift the broader semiconductor sector: the VanEck Semiconductor ETF rose 2.7%, while Lam Research (+8.7%), ASML (+6.7%), and Applied Materials (+6.9%) posted solid gains.

Tesla shares rose 2.1% during Friday’s session but ended the week slightly lower as investors reacted cautiously to new autonomous driving updates from CES.

Meta gained 1.1% after announcing deals with nuclear energy firms Vistra (+10.5%) and Oklo (+7.9%). These partnerships are aimed at powering Meta’s growing AI infrastructure and helped fuel excitement around long-term investments in artificial intelligence.

**Upgrades Push Airline, Defense, and Steel Stocks Higher**

Southwest Airlines rose 3.7% after JPMorgan upgraded the stock to “overweight” and raised its price target. Lockheed Martin gained 4.7% on an upgrade from Truist, while Cleveland-Cliffs added 4.1% following a Morgan Stanley upgrade.

Homebuilders had a standout day after Trump directed his team to buy mortgage bonds. Lennar jumped 8.9%, DR Horton climbed 7.8%, Home Depot rose 4.2%, and Lowe’s added 4.3%. This action was seen as a major tailwind for housing-related stocks.

**Meme Stocks See Mixed Moves**

Popular retail stocks saw volatile swings. Beyond Meat fell 5.3%, Kohl’s dropped 5.6%, and GoPro slipped 1.4%. On the flip side, Opendoor and AMC both surged 13.1%, showing renewed interest from speculative traders.

**Crypto Volatility Continues as Bitcoin Breaks $92K**

Crypto stocks ended last week in the red, but early gains in Bitcoin and Ethereum hint at a better session ahead. Bitcoin surged past $92,000 while Ether moved closer to $3,200. Meanwhile, Coinbase (-2%), MicroStrategy (-5.8%), Mara Holdings (-2.1%), Gemini Space Station (-4.5%), and Bullish (-2.3%) all saw losses on Friday.

**Gold Hits Record High Amid Fed Uncertainty**

Gold briefly touched a record $4,600 as investors rushed to safe-haven assets amid geopolitical tensions and expectations of rate cuts due to pressure on Powell and weaker labor data. Silver also spiked to $84—nearing its own record—and the gold/silver ratio dropped below a key technical level at 55.

**Oil Holds Steady Despite Global Supply Fears**

Oil prices hovered around $59 per barrel as markets weighed geopolitical risks tied to potential U.S. military action in Iran against higher global inventory levels and softer comments from Trump on Venezuela policy. U.S. oil rig counts dipped slightly to 409 from 412 according to Baker Hughes data.

**Dollar Weakens as Powell Investigation Adds Pressure**

The U.S. Dollar Index’s four-day rally came to an end as it dropped below the 98 mark, driven by uncertainty surrounding Powell’s investigation and its impact on future monetary policy decisions.

Powell warned that political interference could undermine the Fed’s independence after being investigated for statements made about Fed office renovations during Senate testimony—a move interpreted by many as part of broader pressure from the Trump administration to lower interest rates.

Other Fed members also weighed in: Raphael Bostic noted ongoing economic inequality (“K-shaped economy”), while Thomas Barkin welcomed falling unemployment but said inflation data may not normalize until April.

**Global Central Banks Hold Steady**

The European Central Bank said current interest rates remain appropriate for now. Meanwhile, reports from Japan suggest the Bank of Japan will likely keep rates unchanged at its next meeting.

**Market Sentiment Shifts After Recent Gains**

Investor positioning shifted notably across major indices:

– S&P 500: Long positions dropped from 76% to 71%
– Nasdaq: Fell out of “heavy buy” territory (from 72% to 57%)
– Dow: Long positions slipped from 67% to 58%
– Russell: Pulled back from extreme long (78% to 60%)

In Europe and Asia:

– DAX: Shifted from majority long (55%) to majority short (55%)
– Nikkei: Dropped from strong buy (68%) to slight sell (51%)

**Commodities: Sentiment Cools After Price Spikes**

Investor enthusiasm cooled slightly in gold (from 82% long to 68%), silver (77% from 84%), and oil (76% from 88%) after strong price gains last week. Meanwhile, natural gas saw more investors piling in on the long side, now at an extreme 87%.

**Forex Traders Trim Dollar Positions**

Traders took profits in USD/CHF as long sentiment dropped from 88% to 81%. In USD/JPY, positioning flipped from slight buy (53%) to majority short (57%).

EUR remained a heavy buy (69%), while GBP and AUD were still net short but easing (GBP at 58%, AUD at 55%). USD/JPY now sees a slight sell signal with JPY gaining slight long momentum.

**U.S. Jobs Report Shows Softening Labor Market**

December’s Non-Farm Payrolls came in at just +10K—well below forecasts of +60K—while wage growth rose by 0.3%, matching expectations. The unemployment rate ticked down slightly to 4.4%, but labor force participation also declined to 62.4%. Overall, these numbers suggest a softening job market without signs of collapse.

Consumer sentiment improved slightly, with January’s University of Michigan survey rising to 54 vs expectations of 53.5. Inflation expectations held steady at 4.2% for the next year but nudged up for five years (3.4% vs previous 3.2%).

**Europe and Canada Economic Updates**

Germany’s industrial production rebounded strongly in November (+0.8% m/m), beating estimates, while Eurozone retail sales also came in better than expected (+0.2% m/m). In Canada, December jobs rose by 8,200 vs expected decline of -1,800—but unemployment ticked up slightly to 6.8%.

**What’s Coming Up**

Today’s calendar is relatively light for the U.S., though traders will watch closely for any comments from Fed members regarding the Powell probe.

In Europe, key UK data will be released Thursday—including November GDP figures—while China trade data is due Wednesday along with other key updates later this week.

The U.S. Supreme Court did not release a ruling on tariff legality last Friday; the next decision batch is expected this Wednesday.

**Key Market Keywords:**
Jerome Powell investigation, Federal Reserve, interest rates, S&P 500 record high, Nasdaq rally, small-cap stocks up, Intel stock jump, semiconductor rally, Meta AI power deals, Bitcoin over $92K, gold record high, oil price steady, consumer sentiment up, U.S jobs report weak, global central banks steady, market sentiment shifts

This simplified breakdown helps traders and investors stay informed about major market developments across stocks, commodities, crypto, forex, and economic data—all in one place.