(Jan 30): US equities continued their slide on Friday morning as traders bet that President Donald Trump’s pick to replace Jerome Powell as chair of the Federal Reserve would bring a hawkish stance to the central bank.
The S&P 500 Index declined 0.2% as of 9.35am in New York, adding to declines after Thursday’s rout. The tech-heavy Nasdaq 100 Index fell 0.4%, while the Dow Jones Industrial Average retreated 0.2%.
“The US stock market is trading lower this morning on the news that President Trump has nominated Kevin Warsh to be the next chair of the Federal Reserve,” said Matt Maley, chief market strategist at Miller Tabak + Co. He noted the declines in the market are a function of traders’ views that Warsh “is seen as less supportive of deep rate cuts”.
Trader hopes for additional rate cuts were dealt another blow after a hotter-than-expected producer price report Friday morning, reflecting higher costs for services. Markets are still pricing in a low likelihood of a rate cut at either the March or April Fed meetings.
“Financial markets are doing what you’d expect. Equity futures are down and longer-term rates are up,” Neil Dutta, head of economic research at Renaissance Macro Research, said about the reaction to the Warsh pick. Dutta sees near-term rate hikes leading to “tougher hikes later” and because “Warsh has been a policy hawk his entire life, his newfound dovishness looks very suspect.”
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Corporate insiders have have been selling stocks at the fastest pace in five years, according to data compiled by the Washington Service.
In the tech sector, Apple Inc’s earnings from Thursday beat expectations and provided a rosy forecast. Sandisk Corp shares soared after the computer hardware company’s revenues beat expectations, prompting an upgrade.
The results were closely watched after competitor Microsoft Corp posted its biggest one-day drop since 2020 on disappointing cloud revenue and higher-than-expected capital spending. It was the biggest one-day selloff in any tech stock since DeepSeek sent Nvidia Corp shares plummeting last year.
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The materials sector is expected to be in focus Friday with gold and silver prices falling sharply in the morning.
Energy, which has been the top-performing S&P 500 sector this month, is seeing some weakness Friday as oil prices slipped over concerns about a US intervention in Iran. Exxon Mobil Corp and Chevron Corp both reported better-than-expected earnings.
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