Stock Market Reaction Is Muted After Trump’s Threats to Lisa Cook and the Fed

Investors collectively shrugged on Tuesday at President Trump’s latest threat to the independence of the Federal Reserve.

Stocks rose and the bond market reaction was muted after Mr. Trump said that he was firing the Federal Reserve governor Lisa Cook over alleged discrepancies in her personal mortgage disclosures.

It is not clear whether Mr. Trump has the legal authority to oust Ms. Cook, who has vowed to stay in her position, which could set off a protracted legal battle.

But the relative quiet in the market belies a deeper worry on Wall Street about the longer term erosion of the central bank’s ability to make decisions over how to manage the economy free from political meddling, a threat that some analysts say investors have yet to fully realize.

“It’s equivalent to the parable about the frog in water and gently heating the water up,” said Eric Winograd, chief economist at Alliance Bernstein, an investment firm. “The market is not yet as concerned as I think it should be, but if we keep going down this path at some point the frog is going to boil.”

Leading Wall Street banks are not weighing in. Spokespeople for JP Morgan Chase, Bank of America and Goldman Sachs declined to comment on Mr. Trump’s move to remove Ms. Cook, the first Black woman to serve as one of the seven Fed governors.