Trump's Fed Shakeup and Nvidia's AI Influence: Wall Street on Edge

Wall Street's major indexes braced for a lukewarm opening, weighed down by rising Treasury bond yields following President Donald Trump's extraordinary removal of a Federal Reserve governor. This move has sparked apprehension over the central bank's autonomy, while investors anticipate Nvidia's important earnings report and a critical inflation update later in the week.

In a rare action, Trump cited alleged misconduct involving mortgage loans as the reason for dismissing Fed Governor Lisa Cook, leading to trepidation about potential implications for upcoming monetary policy decisions. Legal challenges to this decision are expected, but it opens the possibility for Trump to appoint a new Fed member amid his push for interest rate reductions.

Despite inflationary pressures and mixed economic signals, markets are pricing in an interest rate cut for September, buoyed by dovish indications from Fed Chair Jerome Powell. Key inflation and employment reports remain crucial as traders reassess these expectations. Nvidia's performance and AI industry implications also loom large on Wall Street's horizon.

(With inputs from agencies.)