US STOCKS-US stocks slide after Trump taps Warsh to succeed Powell at Fed

The CBOE volatility index - Wall Street's "fear gauge" eased to 17.3 points from the one-week high of 19.31 it hit on Thursday. SMALL-CAPS OUTPERFORM IN JANUARY Apple, wrapping ‍up the week's tech results, forecast higher-than-expected revenue growth of up to 16% for the March quarter, but warned rising memory chip prices had started to pressure profitability. Investors responded to Big Tech earnings this week ​with a stark warning: record capital-spending binges will be tolerated so long as the growth keeps coming.

U.S. stocks fell on Friday after President ‌Donald Trump nominated former Fed Governor Kevin Warsh to succeed Jerome Powell to lead the U.S. central bank, a decision that many investors view as hawkish. Fed-critic Warsh, 55, is expected to favor lower interest rates while stopping short of the more aggressive monetary easing linked to some ⁠other potential nominees.

His appointment requires a Senate confirmation, with Chair Jerome Powell's term ending in May. If confirmed, Warsh would take the helm of a central bank he has argued should scale back its role in the economy and rethink its approach to monetary policy. "It's hard to know exactly what direction Warsh will go because he's had a past history of being a hawk. He's traditionally been ​known as much more concerned about inflation," said Eric Gerster, chief investment officer at AlphaCore Wealth Advisory.

"He's become more open to the idea of lower rates ... which obviously is what the ‍current administration is looking for." Meanwhile, producer prices increased more than expected in December, suggesting inflation could pick up in the months ahead.

Investors continued to bet on at least two 25 basis-points interest-rate cuts by the end of 2026. The central bank held rates steady earlier this week, pausing an easing cycle which has supported U.S. stocks. At 11:58 a.m. ET, the Dow Jones Industrial Average fell 421.27 points, or 0.86%, to 48,650.29, the S&P 500 lost 39.69 points, or 0.57%, ⁠to 6,929.41 ‌and the Nasdaq Composite lost 175.50 points, or 0.74%, ⁠to 23,509.

The small-cap Russell 2000 index, which is more sensitive to interest rates, fell 1.6%. The CBOE volatility index - Wall Street's "fear gauge" eased to 17.3 points from the one-week high of 19.31 it hit on Thursday.

SMALL-CAPS OUTPERFORM IN JANUARY Apple, wrapping ‍up the week's tech results, forecast higher-than-expected revenue growth of up to 16% for the March quarter, but warned rising memory chip prices had started to pressure profitability.

Investors responded to Big Tech earnings this week ​with a stark warning: record capital-spending binges will be tolerated so long as the growth keeps coming. Microsoft logged its worst day since March 2020 after its cloud revenue failed to ⁠impress on, while Meta jumped 10% on Thursday.

On the day, rose 4.7%, following reports SpaceX is exploring deals with the electric-vehicle maker and other companies run by Elon Musk. The bar has risen for the AI trade that propelled U.S. equities to record ⁠highs over the past year, and signs of crowding in those high-growth names have prompted investors to rotate into small-caps and other overlooked corners of the market.

The Russell 2000 index of small caps stocks and the S&P 600 was on track to end the month nearly 5% up. That compares with rises of a little more than 1.3% each for the S&P 500 ⁠and the Nasdaq.

"What you're seeing is people moving into a more cyclical story and away from some of the more secular stories around AI," Gerster added. The Dow, meanwhile, is poised to ⁠notch a ninth consecutive monthly advance, its longest ‌winning streak since 2018.

SanDisk shares jumped 9.7% after better-than-expected third-quarter forecast as AI fuels storage demand. KLA Corp beat Wall Street expectations for second-quarter profit and revenue but shares dropped 12.6%. U.S.-listed gold and silver miners tumbled following a more than 5% drop in bullion prices and an 11% ⁠slide in the white metal. The S&P's Material index dropped 2%, leading declines.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)