Trump's Attack on the Fed's Cook Unsettles Traders

US equities fluctuated between slight gains and losses on Tuesday as rising bond yields and political developments weighed on investor sentiment. The uncertainty followed President Donald Trump’s decision to remove a Federal Reserve governor, sparking fresh concerns over the central bank’s autonomy.

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The S&P 500 Index slipped 0.1% at 9:35 a.m. in New York, extending a trend of weakness after falling in six of the last seven sessions. Despite the pullback, the benchmark remains just 0.4% away from its all-time high. The Nasdaq 100 also edged down 0.1%, dragged by a decline in Charter Communications Inc. Meanwhile, a basket tracking the Magnificent Seven which includes tech giants like Apple Inc. and Meta Platforms Inc. was mostly flat. Nvidia Corp., a key driver of the AI boom, gained 0.5%.

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In individual stock moves, Interactive Brokers rose 0.9% after S&P Dow Jones Indices announced it would join the S&P 500 Index on Aug. 28, replacing Walgreens Boots Alliance Inc. Another standout performer was EchoStar, which soared nearly 80% after AT&T unveiled plans to acquire its spectrum licenses in a deal valued at about $23 billion.

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In a surprising and controversial move, Trump announced the removal of Federal Reserve Governor Lisa Cook amid allegations of falsified mortgage documents. While no formal charges have been filed, the decision is expected to face significant legal challenges. Still, the development has unsettled markets, raising questions about the future direction of monetary policy.

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“If successful, this would create the second vacancy on the board in less than a month and give the president greater influence over the Fed’s policy direction,” wrote Michael Feroli, chief U.S. economist at JPMorgan Securities, in a client note. “That said, it’s far from certain that the removal will stand.”Investors are now gearing up for Nvidia’s earnings report, scheduled for Wednesday, which could provide fresh insight into the artificial intelligence-driven rally that has fueled record highs in U.S. equities. Additionally, a key inflation report later this week will be closely watched for clues on the Federal Reserve’s next move regarding interest-rate cuts.

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On the economic data front, U.S. business equipment orders rose in July by more than economists projected, signaling that companies are moving forward with capital spending as uncertainties around trade and tax policies start to ease. Later in the session, markets will parse the Conference Board’s consumer confidence index for more clues on household sentiment.

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Trade headlines also grabbed attention after Trump threatened to introduce new tariffs and export controls on advanced technology and semiconductors. The move aims to counter digital services taxes imposed by other nations that primarily impact American tech firms.

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Among the day’s notable gainers, Advanced Micro Devices (AMD) surged 3.6% after announcing a quantum computing partnership with IBM, a deal that underscores AMD’s push into cutting-edge technology. Semtech Corp. jumped 14% following better-than-expected second-quarter earnings and a forward outlook that aligned with market expectations.

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In the healthcare sector, Eli Lilly & Co. climbed 2.3% after reporting positive trial results for its experimental obesity pill, which helped patients shed 9.6% of their body weight a significant step toward regulatory approval. On the downside, Olaplex Holdings fell 1.3% after confirming its acquisition of Purvala Bioscience, a Boston-based biotechnology company.

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Despite the day’s volatility, U.S. stocks remain near record levels as traders weigh political developments, upcoming tech earnings, and macroeconomic indicators. With key reports on the horizon and AI enthusiasm still dominating market narratives, investors are preparing for more potential swings in the days ahead.

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