US sharemarkets finished higher, recovering from early losses as investors pushed past political uncertainty to drive major indices to new all-time highs.
The S&P 500 rose 0.16% to close at 6,977.27, while the Dow Jones Industrial Average added 86 points, or 0.17%, to 49,590. Both touched fresh intraday highs and ended at record levels. The Nasdaq Composite gained 0.26% to 23,733, while the Russell 2000 also notched a new all-time high.
Markets had been sharply weaker earlier in the session, with the Dow down nearly 500 points at the lows, after the US Department of Justice confirmed it had opened a criminal investigation related to Federal Reserve Chair Jerome Powell. Equities rebounded as investors judged the probe unlikely to alter near-term monetary policy, particularly with key inflation data due shortly.
Banks under pressure as policy risk surfaces
Financial stocks bore the brunt of investor unease following renewed political pressure on the Federal Reserve and a proposal to cap credit card interest rates.
Bank shares fell broadly, reflecting concerns that rate caps could restrict lending and pressure profitability. Citigroup slid around 3%, while JPMorgan and Bank of America declined by more than 1%. Capital One dropped 6%.
Despite the weakness in financials, the broader market found support from selective gains in consumer and technology stocks, helping major indices claw back into positive territory by the close.
Gold rallies as investors hedge longer-term risks
Gold prices surged as markets priced in longer-term concerns around central bank independence and inflation risk. Gold futures jumped 2.5% to a record close of US$4,614.70, as investors sought protection against political interference in monetary policy. Expectations for near-term interest rate moves were little changed, with futures markets still assigning only a small probability of a rate cut at the Federal Reserve’s next meeting later this month.
Stock-specific gains steady sentiment
Individual company moves helped stabilise markets after a volatile start to the session. Walmart climbed 3% ahead of its upcoming inclusion in the Nasdaq-100, lifting consumer stocks more broadly. In technology, Palantir rose 1% following an analyst upgrade, while AMD and Oracle also traded higher.
Local markets and key data ahead
Locally, ASX 200 futures point to a 30-points or 0.3%, gain at the open. Westpac is due to release January consumer confidence data later this morning, while in New Zealand the NZIER Quarterly Survey of Business Opinion is the first major economic release of the year. Offshore attention turns to the US December CPI, due early Wednesday AEDT.
