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Stocks opened lower Friday and stayed there through the close. While Wall Street seems to generally approve of President Donald Trump’s pick to replace Jerome Powell as Fed chair, price action today was dictated by a massive precious metals sell-off and the latest round of earnings reports.
Ahead of Friday’s open, President Trump announced via Truth Social that he has picked Kevin Warsh to succeed Fed Chair Powell when his term expires in May, pending Senate approval.
“I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,” Trump wrote on Truth Social. “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down.”
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Warsh previously served on the Federal Reserve Board from 2006 to 2011, and was in the running to be Treasury secretary in Trump’s second term.
“Though he consistently took the hawkish line on inflation during his time inside the central bank, Warsh has more recently advocated for lower interest rates,” writes David Dittman, investing editor at Kiplinger.com, about Trump’s pick for the new Fed chair.
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But as Deutsche Bank economist Matthew Luzzetti notes, a new Fed chair is just one vote on the Federal Open Market Committee. “Warsh will have to convince his colleagues that rate cuts are appropriate this year, an argument that is unlikely to win unless the labor market shows renewed signs of weakening or inflationary pressures ease materially later this year,” he says.
Gold, silver spiral as the dollar strengthens
News of Warsh’s nomination put a temporary halt to the dollar’s slide, with the U.S. Dollar Index (DXY) ending the day up 0.9%.
A strengthening greenback was one reason that dollar-denominated gold (-11% at $4,745.10 per troy ounce) and silver (-31% at $78.53 per troy ounce) sold off sharply Friday, but it wasn’t the only one.
The two have been trading in an “increasingly speculative environment,” says Daniela Hathorn, senior market analyst at Capital.com, with gold and silver prices up 22% and 63% for the year to date, respectively, through Thursday’s close. As such, Friday’s slide “looks consistent with a long-overdue correction after a period of uninterrupted upside,” she adds.
Hathorn notes that today’s pullback does not dull the precious metals’ long-term appeal, “rather it reflects some concern that prices have moved too far, too fast.”
The sell-off dragged down several mining stocks, including Freeport-McMoRan (FCX, -7.5%) and Kinross Gold (KGC, -13.8%).
AmEx falls after earnings, Apple ekes out a win
There was plenty of red ink seen in other corners of the market on Friday, including among blue chip stocks.
American Express (AXP), for one, slumped 1.8% – making it one of the worst Dow Jones stocks – after the financial giant reported fourth-quarter earnings that just missed analysts’ estimates and said its total number of new credit cards was lower than in Q3.
On the plus side, AmEx reported a top-line beat and said its board of directors approved a 16% increase to its quarterly dividend. This marks the fifth straight year the company has hiked its payout.
Apple (AAPL) was down more than 2% at its session low, before swinging to a 0.5% gain in late-day trading. The tech giant turned in a fiscal first-quarter beat thanks in part to a 23% year-over-year rise in iPhone revenue. The company also forecast higher-than-expected revenue for its fiscal second quarter.
Despite the impressive December quarter, Needham analyst Laura Martin says the stock struggled for most of Friday because investors are worried about Apple incorporating Google’s Gemini AI models into its artificial intelligence offerings. Additionally, higher costs for memory chips could weigh on gross margins later this year.
As for the main indexes, the blue-chip Dow Jones Industrial Average fell 0.4% to 48,892, the broader S&P 500 shed 0.4% to 6,939, and the tech-heavy Nasdaq Composite slumped 0.9% to 23,461.