US Equity Indexes Lose Momentum, Treasury Yields Jump as Fed Heavyweights Decry Attack on Powell

05:08 PM EST, 01/15/2026 (MT Newswires) -- US equity indexes were off session highs at the close on Thursday after Federal Reserve heavyweights outlined the consequences of damaging the central bank's independence, undermining the boost to risk sentiment from strong earnings and rolling back of threats to strike Iran.

The Nasdaq Composite climbed 0.3% to 23,530.02, giving up gains of as much as 1% earlier in the session. The S&P 500 rose 0.3% to 6,944.47, also retreating from its intraday high. The Dow Jones Industrial Average rose 0.6% to 49,442.44 as leadership transitioned to old-economy sectors.

Technology, the standout gainer around midday, gave up most gains. Utilities, industrials, and real estate emerged as top gainers.

Chicago Fed President Austan Goolsbee and Fed Governor Michael Barr spelled out the unintended consequences of attacking the Fed's independence, partially offsetting a risk-on sentiment following blowout quarterly results from Taiwan Semiconductor Manufacturing (TSM) and a strong showing from mega-cap banks.

Inflation could come "roaring back" if the Fed's independence is taken away, Goolsbee told CNBC in an interview. "Anything that's infringing or attacking the independence of the central bank is a mess."

Separately, Fed Governor Michael Barr said the US Department of Justice's criminal probe into the central bank's chair, Jerome Powell, is "an assault on the independence of the Fed," Yahoo Finance reported.

On Sunday, Powell said the DOJ investigation centered on his testimony regarding office building renovation reflected continued efforts by the Trump administration to influence monetary policy.

US Treasury yields rose, with the 10-year yield up 3.1 basis points to 4.17% and the two-year rate jumped 5.2 basis points to 3.57%.

In company news, Taiwan Semiconductor Manufacturing (TSM) reported a jump in Q4 earnings and net sales, and issued Q1 revenue guidance above expectations. Shares rose 4.4%. The Goldman Sachs Group (GS) reported Q4 earnings increased from a year ago, beating the consensus. Shares advanced 4.6%, the Dow's biggest gainer. Morgan Stanley (MS) shares jumped 5.8% after the investment bank reported Q4 earnings and revenue above forecasts.

In economic news, US initial jobless claims fell to 198,000 in the week ended Jan. 10 from 207,000, compared with expectations for 215,000 in a Bloomberg-compiled poll.

"Initial jobless claims are still subject to seasonal volatility, but the surprises have been more to the downside," Oxford Economics said in a note. "Looking through the noise, we see no signs that labor market conditions are worsening."

The Philadelphia Federal Reserve's manufacturing index improved to 12.6 in January from a revised minus 8.8 in December, versus expectations for minus 1.4 in a Bloomberg-compiled survey. The index shows a return to expansion after contraction in the previous month.

The New York Federal Reserve's Empire State manufacturing index improved to 7.7 in January from a revised minus 3.7 in December, compared with the 1.0 print expected in a survey compiled by Bloomberg.

West Texas Intermediate crude oil futures sank 4.4% to $59.29 a barrel.

"Oil prices fell for the first time in six days on easing concerns over a major Middle East supply disruption after Trump said he had been assured that Iran would stop killing protesters. While the situation remains fragile, the immediate risk premium has softened," Saxo Bank said in a note.

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