Meanwhile, producer prices rose more than expected in December, suggesting inflation may pick up in the coming months.“There is a general sense of hawkishness in the market following the emergence of the Kevin Warsh name. He is seen as less forgiving than many of the other candidates and is expected to favor fewer interest rate cuts,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “From a policy perspective, the composition of the Fed’s leadership should not, in theory, override its mandate.”
Investors continued to bet on at least two 25 basis point rate cuts by the end of 2026. The central bank held rates steady earlier this week, interrupting an easing cycle that has supported U.S. stocks.
Futures fell overnight, while dollar and Treasury yields rose on Thursday after media reports that the White House was preparing to appoint Trump to Warsh as the next Fed chairman.
At 9:39 a.m., the Dow Jones Industrial Average fell 113.32 points, or 0.23%, to 48,958.24, the S&P 500 lost 14.11 points, or 0.20%, to 6,954.90 and the Nasdaq Composite lost 61.97 points, or 0.27%, to 6,954.90. 23,621.32.The small-cap Russell 2000 index, which is more sensitive to interest rates, fell 0.3%. The CBOE volatility index – Wall Street’s ‘fear gauge’ – rose 0.32 points to 17.2.
SMALL CAPS perform better in January
With corporate earnings in sight, Microsoft is posting its worst day since March 2020 after cloud revenues failed to impress, sparking a broad tech sell-off on Wall Street on Thursday. Shares fell 0.1%.
Apple fell 1.8%. The iPhone maker forecast higher-than-expected sales growth of up to 16% for the March quarter, but warned that rising memory chip prices were starting to put pressure on profitability.
Wall Street has largely recovered from bouts of selling pressure sparked by Trump’s plans to take over Greenland and a mixed set of quarterly earnings.
Lately, signs that AI trading is getting busy have led to a rotation into small caps and other overlooked corners of the market.
The Russell 2000 index of small-cap stocks is on track to end the month up nearly 7%, while the S&P 600 is on track for a gain of more than 6%. That compares with increases of just over 1.8% each for the S&P 500 and the Nasdaq.
The Dow Jones is now on the verge of rising for the ninth month in a row, the longest winning streak since 2018.
Of the 133 companies in the S&P 500 that have reported so far, about 74% exceeded analyst expectations, LSEG data showed Thursday.
Shares of SanDisk rose nearly 20% after better-than-expected third-quarter expectations as AI drives storage demand. KLA Corp beat Wall Street expectations for second-quarter earnings and revenue, but its shares fell 7.7%.
Verizon shares rose 7% after the wireless carrier forecast positive annual profit. American Express forecast full-year profit well above Wall Street expectations, but shares fell 2.5%.
Shares of Chevron rose 1% after the oil giant posted fourth-quarter profit that beat expectations, while shares of Exxon Mobil fell 1% despite beating Wall Street expectations.
US-listed gold and silver miners tumbled after a more than 5% drop in precious metal prices and an 11% drop in white metal. The S&P’s Material index fell 1.3%, which was the biggest decline.
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