Financial markets churned Friday as investors tried to parse what Donald Trump’s new nominee to lead the Federal Reserve could mean for interest rates, a key lever affecting stocks, bonds and other assets. The nomination arrived alongside intense movement across U.S. equities and a sharp reversal in precious metals that had already run up dramatically over the prior year.
The S&P 500 ended the session down 29.98 points, or 0.4%, after it sank as much as 1.1% earlier in the day. The Dow Jones Industrial Average declined 179.09 points, or 0.4%, and the Nasdaq composite slid 223.30 points, or 0.9%, as investors rotated their expectations about the Fed’s next steps.
Traders also watched the U.S. dollar, which rallied after “swiveling a couple times” following Trump’s nomination of Kevin Warsh, a move that aligned with the broader repricing in rates and risk sentiment. In metals markets, gold and silver did not just cool after their gains; they sold off aggressively, extending the sense that the rally had reached an inflection point.
Gold fell 11.4% to settle at $4,745.10 per ounce, after a “tremendous rally” in which gold roughly doubled over 12 months. The metal topped $5,000 for the first time on Monday and was around $5,600 at one point on Thursday before reversing late in the week. Silver plunged even more sharply, dropping 31.4%, after a similarly fast run.
Markets had been pricing precious metals as a hedge while investors weighed risks ranging from potential changes to Fed independence to concerns about tariffs and government debt, according to the AP report. The AP said Friday’s dramatic halt in metals prices may have been “inevitable” given how far and how fast they had surged over the past year.
Stocks tied to the metals trade were hit as the price shock fed through to miners. Newmont fell 11.5%, while Freeport-McMoRan dropped 7.5%, reflecting the effect of the selloff in gold and silver on the sector. Some other large-company names held up better: Tesla rose 3.3% after posting better profit results for the latest quarter than analysts expected, and Apple added 0.5% after reporting a stronger profit than analysts had forecast.
Bond markets were also moving with Fed expectations. The AP reported the 10-year Treasury yield edged up to 4.25% from 4.24% late Thursday, after getting near 4.28% overnight and early morning before falling back. The report said yields faced possible upward pressure from a Friday report showing U.S. inflation at the wholesale level was hotter than economists expected last month, which could make the Fed more likely to keep rates steady for a while rather than cutting them soon.
The AP report said that over the past year, one fear in financial markets was that Trump could reduce the Fed’s independence, a worry that it said helped lift gold and weaken the dollar. It also said the “longtime assumption” for the Fed’s credibility is that it should operate separately from Washington, including when policymakers need to keep rates high long enough to grind down inflation to the Fed’s 2% goal.
Kevin Warsh’s nomination, which still requires Senate approval, became the central question for investors. The AP noted Warsh previously served as a governor on the Fed’s board and had criticized the Fed’s bond buying meant to keep interest rates low, and it described Wall Street’s split view: some saw the nomination as a sign the Fed could remain independent and keep rates higher if necessary, while the AP also said Warsh has recently been critical of Fed Chair Jerome Powell and has voiced support for lower rates.
Thierry Wizman, a strategist at Macquarie Group, said in the AP report that Warsh is “not the Fed’s guy, he is Trump’s guy,” and that he has “shadowed Trump on monetary policy almost every step of the way since 2009.” Wizman also said the nomination “doesn’t necessarily mean that Warsh will push the Fed into rate cuts soon,” but could indicate he “may be quicker to do so when the time comes.”
Abroad, the AP said indexes rose in much of Europe after a mixed performance in Asia. In Indonesia, stocks rose 1.2% in Jakarta after the CEO of Indonesia’s stock market resigned, the AP reported, adding that the market there had stumbled in prior days after MSCI warned about risks including a lack of transparency.