Stocks Off Lows as Trump Taps Warsh as Fed Chair

Published as of: January 30, 2026, 9:15 a.m. ET

(Friday market open) Investors awoke to a new Federal Reserve chairman nominee as President Trump named Kevin Warsh to take over in May from Jerome Powell. Warsh served on the Fed's Board of Governors from 2006 to 2011. Stocks fell steeply overnight but clawed back some losses after the news.

"Warsh was a hawk in his previous time at the Fed," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research (SCFR). "The question is, will he change his views to please the president?" Trump has long pushed for lower rates, and may face a challenge as Sen. Thom Tillis, a North Carolina Republican, posted he will oppose the nomination until the federal criminal probe into Powell is resolved.

Staying in Washington, a deal got forged last night between the White House and Senate Democrats to separate funding for Homeland Security from a massive bill that provides funding for other Cabinet agencies. Both bills require votes by the House, which won't be back until Monday—after today's shutdown deadline. "That may mean a brief shutdown that is mostly ignored, pending the House vote next week," said Michael Townsend, managing director of legislative and regulatory affairs at Schwab. Still, it looks like one less thing to worry about. Add to the worry list today's wholesale inflation report, however, which was far worse than expected and appeared to push stocks down further, threatening this week's light gains.

On Thursday, Wall Street couldn't overcome dramatic selling in Microsoft (MSFT) and the software sector after earnings and guidance failed to impress. The S&P 500 Index and Nasdaq ended slightly to moderately lower after dramatic early drops. A few factors helped prevent a complete washout: big gains in the travel group after robust guidance from Southwest Airlines (LUV), solid earnings from IBM (IBM), AT&T (T), and Caterpillar (CAT), hopes a  shutdown could be avoided, and momentum in the oil patch as crude prices rose on heightened Iran tensions.

1. Wholesale prices surged in December: Friday's December Producer Price Index (PPI), expected to be somewhat sleepy, turned into a headline grabber as headline PPI rose 0.5% and core—excluding food and energy—climbed 0.7%. The consensus from Briefing.com had been 0.2% and 0.3%, respectively. It's unclear if the discrepancy reflected any lingering issues caused by last fall's shutdown, which interrupted data collection in October and November and made monthly comparisons tougher, but it's likely to reinforce ideas that the Fed was right to leave rates paused this week rather than lower them. This also puts the Personal Consumption Expenditures (PCE) Price Index—the Fed's favored inflation metric due February 20—into more focus, with components of PPI that map over into PCE suggesting a hotter print for December PCE, said Kevin Gordon, head of macro research and strategy at SCFR. This includes components like air transport, physician care, and nursing home care.  "It's hopefully the final print that includes any shutdown-related impact, so we'll have cleaner reads moving forward," Gordon said. "The culprit was the services sector, given there was a slight decline in the goods component of PPI."
    
2. Market rewards, punishes: Though earnings season has been healthy with blended year-over-year growth of around 8.5%, even companies that beat estimates are getting hit for other reasons, and misses are being punished even more. By some estimates, this is the harshest earnings season since 2000 in terms of stocks getting sold off for failing to impress. Still, there's a sense that when stocks get pushed down, buyers show up. "Retail traders are playing their 'buy the dip' game with post-earnings drawdowns at an individual stock level," said Liz Ann Sonders, chief investment strategist at SCFR. That seemed to be the case yesterday when the S&P 500 Index stopped short of testing its 50-day moving average during the morning's sell-off and then spent much of the day clawing back. Even so, the "sell America" vibe hasn't vanished. Recent data show significant flows out of U.S. large-cap ETFs with a pick-up of flows into emerging market and developed international ETFs.
    
3. Bitcoin tests support at long-term low: Fears of a deeper, more prolonged bear market—the dreaded "crypto winter"—rose Thursday as bitcoin fell as much as 6%. Bitcoin futures closed 5.4% lower at $84,255, the lowest finish since April 15, and 33% off the October all-time high. Bitcoin enthusiasts have recently lamented how the cryptocurrency has languished while gold has seemingly ripped ever higher in recent months, punching a big hole in the "digital gold" narrative, one of the core theses for bitcoin investors. Lately, though, bitcoin has been highly correlated with big AI companies and, unlike gold, sensitive to risk-off sentiment, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Ferraioli noted that tech stocks drove the Nasdaq sharply lower Thursday before a late rally pared losses.

• Apple dropped 1% despite earnings per share of $2.84 topping consensus of $2.67 and revenue of $143.76 billion beating consensus of $138.39 billion. "Healthy beats nearly across the board," said Nathan Peterson, director of derivatives research and strategy at SCFR. "Margins also came in better than expected, which is encouraging given the ramp-up in memory prices." iPhone sales broke records, and guidance topped consensus, but rising costs caused concerns.
   
• Exxon Mobil (XOM) slipped 1.5% despite beating analysts' consensus on earnings and revenue. Earnings fell year-over-year for a number of reasons, among them weaker crude prices and chemical margins, the company said.
   
• Sandisk (SNDK) catapulted 23% ahead of today's open after earnings per share nearly doubled analysts' estimates and guidance also impressed. Sandisk designs flash memory products required for AI computing.
   
• Western Digital (WDC) inched up 0.9% early today after earnings surpassed Wall treet's expectations and revenue jumped 25% on stronger hard-disk drive demand.
   
• Deckers Outdoor (DECK) surged 13% early today, propelled by better-than-expected earnings and guidance. Hoka net sales in the third quarter climbed 19%.
   
• Crude oil (/CL) dropped 0.6% despite heightened U.S./Iran tensions that recently drove futures prices to four-month highs. President Trump has sent U.S. ships to the region but signaled yesterday he wants to speak to Iran's leaders, CNBC reported.
   
• Lockheed Martin (LMT) climbed 4% yesterday on better-than-expected results, with a record backlog and missile production expected to increase.
   
• Caterpillar (CAT) climbed more than 3.4% yesterday after better-than-expected earnings, though guidance might have been a little lighter than some bulls wanted, Barron's reported. Caterpillar's power generation business is getting a lift from the AI buildout.
   
• Southwest Airlines (LUV) shares surged 19% Thursday after it forecast solid 2026 profits that topped analysts' expectations. Earnings and revenue last quarter were roughly as expected.
   
• Royal Caribbean (RCL) cruised to 18% gains Thursday after strong earnings, helping shares of other cruise companies, too. Travel company gains also reflected the solid results from Mastercard and what they indicated about consumers.
   
• The 10-year Treasury note yield (TNX:CGI) climbed 2 basis points early Friday, but it's unclear if the market was reacting to the Fed chair announcement. Warsh has said he supports lower rates, in line with the president's feelings.
   
• The U.S. dollar index ($DXY) climbed slightly after the announcement of the new Fed chair, but remains near four-year lows.
   
• Gold (/GC) dropped 4% after the Fed chair announcement, though it's unclear if this is a reaction. Gold has pulled back from recent all-time highs above $5,500 an ounce but still is above $5,100 in a sign that investors still look for alternatives to paper assets. Silver fell more than 13% early today, back below $100 per troy ounce. Mining companies fell sharply today as metals retreated.
   
• Bitcoin (/BTC) slid 5% Thursday and then cooled another 1.6% this morning, falling below $85,000 for the first time in two months and hitting the lowest intraday level since November 21. For spot front-month futures, it was the lowest close since April. The risk-off trade that's lifting precious metals is having the opposite effect on bitcoin, Bloomberg reported. Shares of companies associated with crypto also suffered sharp losses.

AMD, Alphabet results on way: Tech earnings season is just getting started. Coming weeks bring results from some of the largest firms as AI continues to fuel the largest tech infrastructure buildout in history. Learn the key trends to watch in Schwab's latest tech sector earnings outlook.

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By late Thursday, the dramatic surge in market breadth that began in late November and peaked in mid-January had faded a bit, with 63.5% of S&P 500 stocks trading above their 50-day moving average (candlesticks). That's still slightly above the 50-day moving average (blue line) of 57.8%, but down from the January high of 74%. It could reflect a recent rotation back into mega-cap tech ahead of earnings from that sector. The S&P 500 Relative Strength Index (bottom chart) sits just below 50, about midway between oversold conditions of 30 and overbought of 70.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

February 2: December construction spending, January ISM Manufacturing Index and expected earnings from Walt Disney (DIS), IDEXX Laboratories (IDXX), and Palantir (PLTR).
February 3: December job openings and labor turnover survey (JOLTS), and expected earnings from Merck (MRK), PepsiCo (PEP), Pfizer (PFE), Eaton (ETN), Advanced Micro Devices (AMD), Amgen (AMGN), and Chubb (CB).
February 4: ADP January employment change, December factory orders, January ISM Services PMI^®, and expected earnings from Eli Lilly (LLY), AbbVie (ABBV), Novartis (NVS), Novo Nordisk (NVO), Uber Technologies (UBER), Alphabet (GOOGL), Qualcomm (QCOM), and Arm Holdings (ARM).
February 5: Expected earnings from Sony (SONY), ConocoPhillips (COP), Bristol-Myers Squibb (BMY), Barrick Mining (B), Amazon (AMZN), and Strategy (MSTR).
February 6: January nonfarm payrolls, January unemployment, February University of Michigan preliminary consumer sentiment, and expected earnings from Philip Morris (PM) and Biogen (BIIB).