Preface

In a week dominated by macroeconomic indicators and notable changes in the U.S. Federal Reserve's potential leadership, American stock markets witnessed a downturn. Investors were particularly wary of President Trump's nomination of Kevin Warsh to succeed the current Federal Reserve Chair Jerome Powell. This move, combined with mixed earnings reports and continuing inflation concerns, set a cautious tone among traders. Accompanying these uncertainties was the looming threat of a U.S. government shutdown, adding further tension to the financial markets.

Lazy bag

Key takeaways include the uncertainty surrounding the potential new Fed Chair and its implications on monetary policy, linked with ongoing inflation concerns driving stocks lower amid a volatile economic landscape.

Main Body

The U.S. stock markets ended lower on Friday as investors responded to an emerging array of uncertainties, primarily revolving around the Federal Reserve's future leadership and rising inflation metrics. President Donald Trump's intention to nominate Kevin Warsh, a former Federal Reserve Governor, as a hawkish successor to Jerome Powell, is seen as a pivotal factor. Warsh is anticipated to prefer maintaining lower interest rates but refrains from aggressive monetary easing, posing potential shifts in economic strategy as Powell's term nears its end in May.

Against the backdrop of complex U.S. international relations, such as tensions with Iran, traders also faced the prospect of a fresh government shutdown. This prospect was due to new legislative hurdles in the Senate over a funding continuation deal for federal operations.

The week's market trends also reflected broader economic anxieties: the Dow Jones Industrial Average dropped 179.09 points, or 0.36%, to close at 48,892.47; the S&P 500 declined by 29.98 points, or 0.43%, landing at 6,939.03; and the Nasdaq Composite saw a decrement of 223.30 points, or 0.94%, resting at 23,461.82. Conversely, the small-cap Russell 2000, although recently outperforming larger indexes, fell by 1.6% on the day. Nevertheless, it managed to secure a monthly rise of more than 5%, surpassing the S&P 500 and Nasdaq's advances.

While defensive stocks, such as consumer staples, retained their ground with Colgate-Palmolive gaining significantly on news of robust annual sales, tech giants like Apple grappled with mixed success following quarterly results. Despite initial losses, Apple recouped some value to close slightly up amid higher-than-anticipated revenue projections.

Further underlying challenges came from producer price indexes, indicating an uptick beyond expectations, hinting at sustained inflationary pressures in forthcoming months. Hence, market sentiments pivoted justifiably on the Fed Chair announcement, coupled with continued scrutiny over government fiscal stability. Volatility in key sectors, including the Materials index, was marked by steep declines, notably in companies exposed to precious metals amidst global sell-offs.

The broader economic and earnings landscape remains dynamic, as evidenced by Microsoft's considerable losses attributed to lackluster cloud revenue productivity. Meanwhile, companies like Verizon witnessed substantial gains due to strong performance in wireless subscription metrics, illustrating diverse corporate resilience within current economic frameworks.

Key Insights Table

Aspect	Description
Potential Fed Chair Nomination	Trump's nomination of Kevin Warsh is seen as hawkish, potentially shifting monetary policy.
Economic Indicators	Rising inflation and producer price indexes suggest ongoing economic pressures.
Market Performance	Major indexes fell with mixed results in sector performances, reflecting cautious investor sentiment.

Last edited at：2026/2/5