August 26th, 2025
Fed shock rattles markets – U.S. equities opened choppy, longer-dated Treasuries sold off, and the dollar weakened after overnight news that President Trump is seeking to remove Federal Reserve Governor Lisa Cook. Stock market moves remain modest, with investors eyeing NVIDIA’s earnings on Wednesday.
The Dow Jones Industrial Average (^DJI) hovered above the flat line, while the S&P 500 (^GSPC) climbed 0.1%. The tech-heavy Nasdaq Composite (^IXIC) rose 0.1%. The mixed performance among the major gauges follows a pullback in stocks on Monday after a record-setting rally at the end of last week.
Trump announced the dismissal citing alleged mortgage fraud, but Cook has vowed to challenge the decision in court. Legal precedent suggests the president’s authority to remove Fed governors is limited, making the outcome highly uncertain. A successful removal would allow Trump to nominate a replacement—potentially reshaping the Fed in a more dovish direction. Importantly, any new governor seated before February 2026 would help confirm (or block) the terms of 12 regional Fed presidents, potentially amplifying White House influence over monetary policy. Markets are now weighing the risk that greater Fed politicization could mean easier policy near-term but higher inflation and rates over the longer run.
Economic Takeaways:
- 10-year yields climbed 3 basis points, steepening the curve.
- The dollar slipped against a trade-weighted basket.
- WTI crude eased to $64 per barrel, holding within its recent $60–$65 range.
- The CME FedWatch Tool shows an 86% chance of a Fed cut next month, with 14% odds of no move.
- Gold prices moved higher Tuesday to trade near record levels.
- Trump vowed to impose fresh tariffs and export curbs on chips and technology from countries that “unfairly” placed taxes on US digital services.
Trump Moves to Fire Fed Governor Lisa Cook, Who Refuses to Resign
President Trump announced Monday he has removed Fed Governor Lisa Cook, citing alleged mortgage fraud. Cook responded she will not resign, arguing the president lacks the legal authority to fire her. Her attorney confirmed a lawsuit is forthcoming, setting up a potential Supreme Court showdown. Markets showed little reaction Tuesday, while the move raises questions about the independence of the Federal Reserve and possible policy implications.
Trump Media Shares Jump Nearly 5% on Plans to Launch Crypto Treasury Firm
Shares of Trump Media & Technology Group (DJT) rose almost 5% after the company announced a partnership with Crypto.com to launch a new crypto treasury venture, Trump Media Group CRO Strategy, which will accumulate Crypto.com’s cryptocurrency, Cronos.
This move follows Trump Media’s May launch of a bitcoin treasury, part of a growing trend of companies adding digital assets to their balance sheets, inspired by crypto advocate Michael Saylor and his company MicroStrategy (MSTR). The latest development expands Trump’s crypto footprint amid efforts to solidify digital tokens as legitimate currencies.
On the Move
- AMD (AMD) rose 2.5% after Truist upgraded the stock to Buy from Hold, citing growing adoption of AMD chips by hyperscale customers versus rival Nvidia.
- Eli Lilly (LLY) gained 2.2% pre-market after its weight-loss drug hit key targets in a diabetes trial.
- Interactive Brokers (IBKR) will replace Walgreens Boots Alliance (WBA) in the S&P 500 index later this week.
- EchoStar (SATS) soared 67% after AT&T (T) announced a $23 billion acquisition of spectrum licenses, calling the deal an investment in critical U.S. infrastructure.
- CSX (CSX) slipped 1.7% after Warren Buffett said Berkshire Hathaway (BRK.B) is not pursuing a merger between CSX and its BNSF rail unit.
- Interactive Brokers (IBKR) climbed 3.4% on news it will join the S&P 500, replacing Walgreens Boots Alliance (WBA), which has been acquired by private equity.
- Circle Internet Group (CRCL) dropped 7%, extending weakness in crypto stocks as bitcoin futures (/BTC) slid another 1% this morning following Monday’s 5% decline. Coinbase (COIN) and MicroStrategy (MSTR) also fell. Bank of America noted crypto was the only major asset class to see outflows last week.
- GoPro (GPRO) shares fell as much as 4.5% Tuesday, before paring losses, after surging 36%during the prior trading session.
- Defense shares held steady Tuesday after Commerce Secretary Howard Lutnick told CNBC that the Trump administration is exploring taking stakes in leading defense contractors, following the U.S. government’s 9.9% stake in Intel (INTC).
What’s Ahead
Today’s durable goods report offered a silver lining: while headline orders slumped in June, core capital goods orders rose a strong 1.1% m/m, signaling businesses are still investing despite trade-policy headwinds. Housing data, however, remain weak—both FHFA and S&P indices showed falling home prices in June, with higher mortgage rates, rising inventory, and slower sales pressuring the market. Later this week, attention turns to consumer confidence surveys and Friday’s July PCE report, which includes the Fed’s preferred inflation gauge.
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