Axios is reporting that Treasury Secretary Scott Bessent privately warned President Trump that the federal investigation into Fed Chair Jerome Powell had “made a mess” and risked destabilizing financial markets. According to the report, Bessent did not challenge the need for a full investigation, but he made clear that the timing and political optics were dangerous—especially for markets that depend on the Federal Reserve’s independence and credibility.
Bessent’s concern, according to Axios, was rooted in expectations around leadership transition. The assumption had been that once President Trump named a new Fed chair, Powell would step aside in an orderly fashion. Instead, the investigation changed that dynamic. Rather than leaving quietly, Powell now appears more likely to dig in, creating a protracted and politically charged standoff that adds yet another layer of uncertainty for investors. That shift, Bessent reportedly warned, “made a mess” of what should have been a clean handoff.
On Sunday night, President Trump denied having any knowledge of a Justice Department investigation, telling reporters:
“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings.”
Powell, in response, struck a defiant but measured tone, saying:
“No one — certainly not the chair of the Federal Reserve — is above the law, but this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Markets initially reacted with caution. Stocks dipped on the headline, as investors briefly priced in the risk that political pressure on the Fed could undermine monetary policy independence and complicate rate-setting at a critical time for the economy. However, that weakness was quickly bought.
By mid-session, the NASDAQ had rebounded sharply and was trading near record highs, up 122 points, or 0.51%, at 23,791.85. The index reached a session high of 23,800.52, putting it within striking distance of its all-time high at 23,958.47. Earlier in the day, the NASDAQ had fallen as low as 23,562.97, down 108 points, showing just how quickly sentiment flipped once dip buyers stepped in.
The S&P 500 also erased its early losses, climbing 16.50 points, or 0.24%, to 6,982.66. The index had traded as low as 6,934.07, down 32.21 points at its worst levels, before recovering alongside the tech-led rally. The S&P is on pace for a record close today.
The market’s message is clear: while political risk around the Fed remains a concern, investors are still willing to buy weakness as long as liquidity, earnings, and growth trends remain intact. For now, stocks are choosing to look past the noise — but if tension between the White House and the Fed remains, the story may not be over as investors worry about the political implications
This article was written by Greg Michalowski at investinglive.com.