President Donald Trump acted to fire Federal Reserve Governor Lisa Cook in an unprecedented move that puts the central bank’s independence in question. Wall Street, however, is unfazed for now. Stock futures only fell slightly on Tuesday . The Treasury yield curve steepened a touch — with the 2-year yield falling and its benchmark 10-year counterpart rising slightly — but no major levels were breached. Gold prices did rise a bit as the U.S. dollar slipped, but again, we’re not talking about major moves by any means. The greenback traded just 0.1% lower, while spot gold rose 0.1%. (It’s late August after all). While the lackluster market reaction may be surprising to some, there are several reasons why investors may not want to rock the boat just yet. @DJ.1 1D mountain Dow futures intraday First, there are questions of whether Cook’s firing will stick. JPMorgan’s trading desk noted the Fed official’s dismissal “appears destined to be a long term legal process, but it is unclear whether ‘firing for cause’ means allegations, despite no indictment, or whether it means a criminal conviction or loss of a civil case. Further, is Cook allowed to stay while the legal process plays out? It seems more likely there the answer is Yes given the Supreme Court’s rulings earlier this year.” Second, there are too many potentially bullish catalysts coming up for investors to get out of stocks en masse. Nvidia is set to post earnings Wednesday after the bell. Should the artificial intelligence chipmaker come out with another strong report, it could revitalize a recently struggling AI trade. The personal consumptions expenditures price index, the Fed’s preferred inflation gauge is due out Friday — and could reinforce expectations for rate cuts in what’s left of 2025. “In the immediate term, markets will probably get over the [Lisa] Cook news fairly quickly (assuming this is a discrete event and Trump doesn’t attempt to fire Powell), turning its attention back to Nvidia, the PCE,” wrote Adam Crisafulli of Vital Knowledge. To be sure, “markets have not been happy about the gradual erosion of the Fed’s independence since Trump took office in Jan[uary] and nearly immediately began berating Powell, and the decision to fire Cook will further alarm investors, who fear the central bank is becoming increasingly captive to the White House and Congress,” added Crisafulli. “If the Cook termination is allowed to proceed (it’s not clear whether any legal challenge will be filed, either by Cook herself or the Fed broadly), it would set a stark precedent, putting other Fed officials on notice that they serve (nearly) at the pleasure of the president.”
Why Trump’s Fed takeover attempt isn’t rocking the stock market yet
Aug 26, 2025
