It was a crowded week on Wall Street, with a Federal Reserve meeting and a slate of major tech earnings. But the moment that ultimately mattered most came Friday morning, when President Donald Trump nominated Kevin Warsh as the next Chair of the Federal Reserve.
Warsh is set to replace Jerome Powell when Powell's term expires in May. A former Federal Reserve governor from 2006 to 2011, Warsh was one of the youngest policymakers in modern Fed history, joining the Board at just 35.
Warsh is also well known as a long-time critic of quantitative easing, the policy that expanded the Fed's balance sheet through large-scale asset purchases following the financial crisis.
Fears Over Fed Independence Vanish
To markets, Warsh's nomination signals a Federal Reserve less willing to aggressively cut interest rates, following weeks of concern that monetary policy could tilt toward easier conditions to accommodate President Trump's political agenda.
The market reaction was swift. Trends that had dominated markets for much of the month abruptly reversed. The U.S. dollar, which had fallen to four-year lows, found support. Meanwhile, the powerful rally in precious metals came to a sudden halt.
Silver, which on Thursday had surged roughly 60% on the month — its strongest monthly performance since the U.S. Civil War in 1864 — fell about 30% on Friday morning alone, marking its worst day since 1980.
Gold followed with a roughly 10% decline – another move unseen in over four decades.
In earnings, the biggest shock came from Microsoft Corp. (NYSE:MSFT), whose shares plunged about 10% on Thursday — their worst session since March 2020 — despite reporting stronger-than-expected earnings. Investors instead focused on slowing Azure cloud growth and cautious guidance, reviving doubts about the pace and sustainability of AI monetization.
Meta Platforms Inc. (NASDAQ:META) delivered the opposite surprise. Shares rallied after a record quarter, with revenue up roughly 24% year over year and daily active users across its apps rising to about 3.58 billion.
Elsewhere in tech, a supply-side squeeze continued to drive outsized gains for memory and storage chipmakers such as SanDisk Corp. (NASDAQ:SNDK), Seagate Technology Holdings plc (NASDAQ:STX), Western Digital Corp. (NASDAQ:WDC) and Micron Technology Inc. (NASDAQ:MU), all up more than 50% year to date.
Meanwhile, Michigan-based stocks capped off a strong month. General Motors Co. (NYSE:GM) extended its rally to a seventh straight month — its longest winning streak since returning to public markets in 2011 — closing at record highs. Ford Motor Co. (NYSE:F) gained about 5%, finishing January at its highest level since July 2023.
Image created using artificial intelligence via Midjourney.
