US Stock Futures Decline as Dollar Strengthens Amid Federal Reserve Policy Uncertainty

US stock futures declined sharply in early trading, with the S&P 500 futures dropping 1.2% and Nasdaq 100 futures falling 1.4% as investors reacted to mounting political pressure on the Federal Reserve. The Dow Jones Industrial Average futures also declined by 0.9%, reflecting broad-based risk aversion. The move came after congressional leaders introduced a bipartisan bill proposing structural reforms to the Fed’s governance, including expanded congressional oversight and reduced autonomy in monetary policy decisions. The dollar strengthened significantly, with the DXY index rising to 110.33—its highest level since February 2024. This shift was driven by expectations that increased political interference could undermine the Fed’s credibility and lead to more inflationary policy responses. The euro fell to $1.062, and the Japanese yen weakened to 152.80 per dollar, signaling international concerns over US policy stability. Markets are now pricing in a 63% chance of a Fed rate cut in March, down from 78% at the start of the week. Bond yields rose, with the 10-year Treasury note climbing to 4.72%, reflecting renewed expectations of prolonged higher rates. Large-cap tech stocks were hit hardest, with Apple (AAPL), Microsoft (MSFT), and NVIDIA (NVDA) all seeing pre-market losses between 1.5% and 2.1%. The developments have sparked alarm among institutional investors and asset managers, with several hedge funds adjusting exposure to US equities and increasing positions in defensive sectors such as utilities and healthcare. The S&P 500’s forward P/E ratio has now reached 22.4, near the upper end of its 10-year range, raising valuation concerns amid shifting macroeconomic sentiment.