U.S. stocks closed lower on Friday. On one hand, news of Kevin Warsh's nomination for Federal Reserve Chair boosted the U.S. dollar and triggered a sharp sell-off in precious metals; on the other hand, stronger-than-expected U.S. December inflation data further intensified market volatility. At the close, the Dow Jones Industrial Average fell 179.09 points, or 0.36%, to 48,892.47, the Nasdaq Composite dropped 0.94% to 23,461.82, and the S&P 500 declined 0.43% to 6,939.03. Despite the day's losses, all three major indices remained in positive territory for January, with the S&P 500 and the Dow up 1.4% and 1.7% respectively, and the Nasdaq gaining 1%.
In commodities, international oil prices traded within a narrow range. The WTI crude oil front-month contract edged down 0.32% to $65.51 per barrel, while the Brent crude front-month contract slipped 0.03% to $70.69 per barrel. Precious metals markets experienced a significant downturn. The COMEX February gold futures contract plunged 11.37% to $4,713.90 per ounce, marking its largest single-day percentage decline since January 1980. The February silver contract plummeted 31.35% to $78.29 per ounce, its worst performance since March 1980.
Among individual stocks, Apple's shares rose 0.46%, buoyed by strong iPhone demand and fiscal 2026 first-quarter earnings that surpassed Wall Street expectations. However, Morgan Stanley cautioned that concerns over Apple's memory supply chain persist, noting that since management did not explicitly address second-quarter memory supply risks, the upcoming quarterly report due in late April and the guidance for the June quarter will be critical for the stock's near-term trajectory. Most major tech stocks declined. Tesla gained 3.32%, while Google edged down 0.04%, Nvidia fell 0.72%, Microsoft dropped 0.74%, Amazon declined 1.01%, Oracle slid 2.62%, and Meta retreated 2.95%. Gold and silver mining stocks listed in the U.S. were hit hard by the precious metals sell-off. Coeur Mining's stock price tumbled 17%, and Barrick Gold fell nearly 11%, its largest drop since April 2017. The iShares Silver Trust ETF crashed over 28% on Friday, its biggest single-day decline on record. Matt Maley, Chief Market Strategist at Miller Tabak, commented that fundamental factors rarely change so drastically in one day, suggesting such a sharp drop might reflect forced liquidations in the market.
SanDisk's stock surged 6.85% after its fiscal 2026 Q2 earnings report showed revenue of $3.03 billion, a 61.2% year-over-year increase, beating the consensus estimate of $2.69 billion, driven by soaring demand for AI storage. Earnings per share came in at $5.15, significantly higher than the $3.54 consensus expectation. The adjusted gross margin was 51.1%. Telecom giant Verizon jumped over 11% after reporting better-than-expected adjusted earnings and net revenue for the fourth quarter of 2025. The company also approved a new common stock repurchase program of up to $25 billion. The Nasdaq Golden Dragon China Index fell 2.36%. Alibaba, NetEase, Baidu, and JD.com all declined more than 2%, while Pinduoduo dropped 1.59%.
On Friday, U.S. President Donald Trump nominated former Federal Reserve Governor Kevin Warsh to succeed Jerome Powell as the new Chair of the Federal Reserve. Media reports indicated that Warsh advocates for reducing the size of the Fed's balance sheet and has been critical of quantitative easing policies. President Trump has repeatedly criticized Chairman Powell for being "too slow" to cut interest rates, meaning investors will closely scrutinize Warsh's potential policy actions if confirmed. Lindsey Piegza, Chief Economist at Stifel, stated in a report: "Although Warsh advocated for rate hikes during his tenure as a Fed Governor, he has since called for the Fed to establish a new policy framework and implement low-interest-rate policies, which clearly aligns with the White House's policy objectives." Richard Saperstein, Chief Investment Officer at Treasury Partners, said: "Kevin Warsh's nomination for Fed Chair is exactly the outcome the market was hoping for. He is steady, well-known in capital markets circles, and the market expects him to uphold the central bank's independence, which is crucial. Importantly, his nomination faces minimal hurdles for Senate confirmation." Data released by the U.S. government showed the core Producer Price Index (PPI) rose a substantial 0.4% month-over-month in December, with the annual rate holding steady at 3.5%, matching its highest level in nearly a year. Wholesale prices represent the costs businesses pay for raw materials or goods intended for direct sale to consumers, and their changes typically influence the overall inflation rate. The rise in wholesale prices indicates that exceptionally high inflationary pressures persist in the U.S. economy. While President Trump desires significant interest rate cuts from the new Fed Chair to stimulate the economy, Warsh would find it difficult to implement such cuts unless inflation begins to retreat towards the Fed's 2% target. The Fed's decision to hold key rates steady this week was partly due to stubbornly high inflation, as cutting rates could potentially exacerbate price pressures in some scenarios. St. Louis Fed President Alberto Musalem stated on Friday that further rate cuts are unnecessary unless the job market weakens or inflation shows clear signs of moderating. He believes the current policy rate range of 3.50%-3.75% is at a neutral level. He added that he expects the U.S. economy to continue growing above trend, with current credit conditions and fiscal policy providing a "tailwind," thus negating the need for monetary stimulus. However, Fed Vice Chair for Supervision Michelle Bowman maintained that she still believes rates should be lowered, but voted to keep policy unchanged this week merely to gather more data before the next potential reduction in borrowing costs. Bowman said she anticipates three 25-basis-point rate cuts will be needed this year, and her analysis of economic risks remains unchanged, noting that while inflation may be approaching 2%, a softening labor market still warrants accommodative monetary policy. Angelo Kourkafas, Senior Global Strategist at Edward Jones, commented: "Investor concerns currently stem from a confluence of factors—the Fed Chair nomination being settled, mixed tech earnings, persistent inflationary pressures, and the uncertainty of a potential government shutdown, even though a shutdown, if it occurs, is widely expected to be short-lived." U.S. Treasury yields were mixed. The 10-year Treasury yield rose 1.4 basis points to 4.240%, while the 2-year yield fell 2.5 basis points to 3.527%. The U.S. Dollar Index climbed back above the 97 level.
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