NEW YORK: US stocks fell on Friday after President Donald Trump nominated former Fed Governor Kevin Warsh to succeed Jerome Powell to lead the US 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.
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 US stocks.
At 11:58 a.m. ET, the Dow Jones Industrial Average fell 421.27 points, or 0.86 percent, to 48,650.29, the S&P 500 lost 39.69 points, or 0.57 percent, to 6,929.41 and the Nasdaq Composite lost 175.50 points, or 0.74 percent, to 23,509.
The Dow, meanwhile, is poised to notch a ninth consecutive monthly advance, its longest winning streak since 2018.
SanDisk shares jumped 9.7 percent 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 percent.
US-listed gold and silver miners tumbled following a more than 5 percent drop in bullion prices and an 11 percent slide in the white metal. The S&P’s Material index dropped 2 percent, leading declines.
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