Fed Vibes Lift Stocks, Dow Up 515 Points: Stock Market Today

Stocks rebounded Monday as markets continued to price in President Donald Trump's nomination of Kevin Warsh to replace Jerome Powell as Fed chair. The main U.S. equity indexes also reflected the bullish history of government shutdowns, even if the one that began on Saturday is only partial and is expected to be much shorter than the one that ended in November.

Washington, D.C., is closed again for a lot of official business, with the House of Representatives not set to vote until Tuesday on a bill to end the latest government shutdown.

That bill won't be signed into law in time to prevent the delayed release of the December Job Openings and Labor Turnover Survey (JOLTS) and the January jobs report, which were on the economic calendar for Tuesday and Friday, respectively.

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Wall Street saw plenty of signals from Washington, though, especially as it comes to Trump's pick to be Fed chair. Viewed as a "hawk" relative to other candidates and an open advocate of "regime change" at the Fed, Warsh will navigate between Trump's desire for lower interest rates despite the threat of inflation and tariffs-related uncertainty by emphasizing the central bank's balance sheet rather than the federal funds rate as the primary instrument of monetary policy.

The U.S. Dollar Index (DXY) was up again, rising to 97.62 from 96.99 on Friday and 96.28 as of Thursday's close. The yield on the 2-year Treasury note, seen as a short-term proxy for Fed policy, rose to 3.574% from 3.527% on Friday. The yield on the 10-year Treasury note, considered a broader barometer of macroeconomic stability, was up to 4.281% from 4.241%.

CME FedWatch now reflects a 49.0% probability that the Fed will trim the fed funds rate by 25 basis points at its June meeting, when Warsh, pending Senate approval, will be in charge of the agenda. That's up from 41.6% as of January 2.

At the closing bell, the blue-chip Dow Jones Industrial Average was up 1.1% to 49,407, the broader S&P 500 had added 0.5% to 6,976, and the tech-heavy Nasdaq Composite was up 0.6% to 23,592.

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Walt Disney needs a new CEO

The earnings calendar is relatively unconstrained by federal authority right now. But questions about leadership are top of mind again for Walt Disney (DIS, -7.3%), which was the worst performer among the 30 Dow Jones stocks on Monday, even though the company beat Wall Street expectations for its fiscal 2026 first quarter on both the top and bottom lines.

Weighing on DIS is a report from The Wall Street Journal that CEO Bob Iger, who returned to the company in November 2022, plans to leave again before his contract expires in December.

During management's conference call to discuss results, Iger said Disney has delivered on the turnaround plan he put in place three years ago. Disney said in October that it would name a successor to Iger in 2026. Josh D'Amaro, who runs the company's theme parks and resorts division, is considered a front-runner to become CEO.

“While the change is not likely to result in major strategic shifts," J.P. Morgan analyst David Karnovsky writes, "we do believe the uncertainty around the process has been an overhang to shares." Karnovsky, who has a Buy rating and a $138 12-month target price on the blue chip stock, expects the announcement of a new CEO to provide a catalyst for the share price.

HOOD is an NFL stock

Robinhood Markets (HOOD, -9.6%), meanwhile, was the worst performer among S&P 500 components on Monday, as financial stocks with significant exposure to cryptocurrency and bitcoin reflect an ongoing correction in that volatile market.

Coinbase Global (COIN, -3.5%), one of five stocks to buy for a Trump presidency, is suffering for similar reasons.

There's a particular reason HOOD is down more than COIN, according to Piper Sandler analysts: the online broker's prediction markets business is the fastest-growing unit by revenue in its history.

Prediction markets exposure allows Robinhood account holders to bet on sports, including football. Football accounted for half of the volume on the Kalshi platform since August, and Kalshi is Robinhood's prediction markets partner.

"With the season coming to a close this Sunday," Piper Sandler writes, "many investors wonder how big a hole this could blow in HOOD's prediction revenues."

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David Dittman is the former managing editor and chief investment strategist of Utility Forecaster, which was named one of "10 investment newsletters to read besides Buffett's" in 2015. A graduate of the University of California, San Diego, and the Villanova University School of Law, and a former stockbroker, David has been working in financial media for more than 20 years.