President Donald Trump’s announcement that he will nominate Kevin Warsh to succeed Jerome Powell as Federal Reserve chair sent a jolt through markets on Friday — but not the neat, predictable kind.
Stocks slid, the dollar strengthened and the so‑called safe‑haven rally in precious metals that had gripped traders this month collapsed. The Dow tumbled roughly 500–600 points intraday, the S&P 500 and Nasdaq each lost around 1%, and silver and gold plunged double‑digit percentages after a frenzied run higher.
Why markets moved
Warsh is a familiar name in Washington and on Wall Street: a former Fed governor, a veteran of Morgan Stanley and, by pedigree and résumé, a conventional pick. Trump’s gush of praise on social media — “one of the GREAT Fed Chairmen, maybe the best” — contrasted with investor uncertainty about how Warsh will actually act on interest rates.
That uncertainty matters because markets have spent weeks pricing scenarios where the Fed could ease policy; precious metals in particular were riding a momentum wave. When traders reassessed the likelihood of easy policy under a new chair, they quickly reversed crowded positions. Silver futures plunged as much as the high teens to low twenties percent on Friday, while spot gold slid about 7–8% from record levels earlier in the week.
At the same time, faster‑than‑expected moves in big tech earnings — Microsoft’s dramatic post‑earnings drop and Apple’s paradoxical small pullback despite a strong quarter — added to risk‑off flows. Apple beat fiscal first‑quarter estimates and saw big demand for the iPhone 17, yet the stock still slipped; the company’s performance sits alongside broader questions about which tech names will convert AI investments into profit (for background on Apple’s latest handset, see the iPhone 17 explainer) iPhone 17 and 17 Pro: What’s Really New. The surge of AI spending mentioned by strategists also ties into new tools and models in tech — a context explored in recent coverage of Microsoft’s MAI efforts Microsoft Unveils MAI-Image-1.
The paradox in Warsh’s record
Warsh has been both an inflation hawk and, in recent months, a voice open to the case for lower rates. That flip — or pragmatic pivot, depending on your view — makes him appealing to Trump while leaving markets guessing. Some investors welcomed his experience and perceived institutional credibility; others fretted Warsh might either be too hawkish for markets hoping for cuts or too politicized for an independent Fed.
“Kevin Warsh’s nomination for Fed Chair is exactly what markets were hoping for,” said one market strategist who pointed to Warsh’s familiarity in policy circles and his record of maintaining institutional credibility. But others warned against reading too much into campaign‑era statements: a hawk who publicly embraces dovish language can be a recipe for whipsawing markets.
Political and procedural headwinds
Even if the White House wants Warsh, the path to the Eccles Building runs through the Senate. Republican Sen. Thom Tillis said he’ll oppose any Fed nominee until a Justice Department probe into Chair Powell is resolved; Democrats like Sen. Elizabeth Warren have also signaled resistance. That opposition could make for a bruising confirmation fight or a delay that stretches into spring.
There’s also a technical snag: there are currently no vacant seats on the seven‑member Board of Governors. Powell’s chairmanship ends in mid‑May, but he remains a governor through 2028 unless he steps down. The administration could create a slot by persuading another governor to leave — a possibility that’s part of the chess game around timing and optics.
Inflation and sterling reminders
Fresh economic data gave Warsh and markets another reality check. The Producer Price Index rose 0.5% in December (core PPI +0.7%), leaving the annual PPI at about 3% — comfortably above the Fed’s 2% target and a reminder that price pressures haven’t been banished. That complicates any easy case for immediate, deep rate cuts, even if a new chair wants them.
On the policy front, internal Fed dynamics also mattered: two governors dissented from the recent hold on rates, arguing for cuts to shore up a slowing labor market — comments that underscore tensions within the institution as it prepares for a leadership transition.
Market plumbing: dollar, yields and crowded trades
The dollar firmed after the Warsh announcement, and Treasury yields ticked higher. Traders who had piled into gold and silver as an inflation hedge or speculative momentum trade were the first to get squeezed when the narrative shifted toward a more conventional Fed candidate. Miners and commodity‑linked equities bore the brunt: metal producers plunged alongside spot prices.
Meanwhile, small‑cap indexes that had been rallying in January took a hit, and several large tech names saw outsized moves around earnings and guidance. That combination — political noise, macro data that argues for patience on cuts, and stretched speculative positions — is a volatile mix.
Where this goes from here
Confirmation is not immediate; the Senate vetting process, the unresolved question of Powell’s board status, and how Warsh articulates his stance during hearings will all determine market reaction. If Warsh leans into institutional independence, markets may breathe easier. If he signals that short‑term rate cuts are a priority despite inflation readings, Treasury yields and the dollar could respond in force.
The more immediate takeaway is less tidy: this was a reminder of how quickly narratives can shift in today’s markets — and how concentrated, crowded trades can unwind when the story changes. Expect more headline‑driven volatility in the weeks ahead as investors price the politics, the data, and the Fed’s future leadership.