BY COMFORT OGBONNA
U.S. stock index futures fell sharply on Friday after President Donald Trump said he has finalized his choice to lead the Federal Reserve, with mounting reports pointing to former central bank governor Kevin Warsh as the likely nominee. The prospect of a leadership change at the Fed unsettled markets already rattled by recent volatility and mixed corporate earnings.
Media reports indicated that the White House is preparing to nominate Warsh as the next chair of the Federal Reserve. Warsh was seen entering the White House on Thursday for a meeting with Trump, further fueling speculation that an announcement was imminent. Betting markets quickly reflected the shift in expectations, with the probability of Warsh being selected surging to 94% on prediction platform Polymarket, up from just 33% a day earlier.
Trump said he intends to formally announce his choice to replace current Fed Chair Jerome Powell later on Friday, bringing clarity to a decision that investors have been closely watching for weeks. The identity of the next Fed chair is seen as especially critical at a time when markets are highly sensitive to interest rate policy, inflation risks and the broader economic outlook.
Warsh is widely viewed as a comparatively moderate option among the names under consideration. While markets generally see him as supportive of lower interest rates, he is not perceived as favoring the kind of aggressive monetary easing associated with other potential candidates such as Kevin Hassett, Christopher Waller or Rick Rieder. This balance has made Warsh appealing to investors looking for policy continuity, but his likely appointment still triggered short-term market jitters.
“He’s a former Fed governor, and while he did have a reputation as being an advocate of tighter monetary policy earlier in his career, he’s recently been publicly advocating for a fresh cut in interest rates, which aligns more closely with Trump’s thinking,” said Susannah Streeter, chief investment strategist at Wealth Club. She added that Warsh’s background and experience suggest he would remain cautious if inflationary pressures were to re-emerge, even if he supports lower rates in the near term.
As expectations of a Warsh-led Federal Reserve firmed, the U.S. dollar and Treasury yields edged higher, reflecting bets on a central bank that may be open to rate cuts but unwilling to tolerate a resurgence in inflation. Equity futures, however, moved lower as investors reassessed risk and positioning ahead of the anticipated announcement.
By 04:51 a.m. Eastern time, Dow E-mini futures were down 456 points, or 0.93%. S&P 500 E-minis fell 72.5 points, or 1.04%, while Nasdaq 100 E-minis dropped 339.75 points, or 1.31%. Futures linked to the small-cap Russell 2000 index, which tends to be more sensitive to interest rate expectations, declined 1.63%.
Market anxiety was also reflected in the CBOE Volatility Index, often referred to as Wall Street’s “fear gauge,” which hovered near one-week highs reached in the previous session. The index rose 1.95 points to 18.85, underscoring continued unease among investors.
Thursday’s trading session had already highlighted the fragile mood on Wall Street. Major indexes swung sharply, with the Nasdaq plunging more than 2% at one point before closing 0.7% lower. The S&P 500 also finished down 0.1% after earlier losses of more than 1%, as investors reacted to disappointing corporate news and shifting rate expectations.
Technology stocks bore the brunt of the selling pressure. Microsoft suffered its worst single-day decline since March 2020 after its cloud revenue growth failed to meet lofty expectations, sparking a broad sell-off across the tech sector. The company’s shares were down a further 0.7% in premarket trading on Friday.
Apple also drew attention after forecasting stronger-than-expected revenue growth of up to 16% for the March quarter. However, the iPhone maker cautioned that rising memory chip prices were beginning to squeeze profit margins, tempering investor enthusiasm. Apple shares were marginally lower in premarket trading.
Adding to the risk-off tone, U.S.-listed gold and silver mining stocks dropped sharply following a steep sell-off in precious metals. Gold prices fell more than 5%, while silver plunged around 11%, dragging mining shares lower and adding another layer of pressure to equity markets.
Taken together, the combination of leadership uncertainty at the Federal Reserve, recent market volatility and mixed signals from major companies kept investors on edge, setting the stage for a potentially turbulent end to the trading week.
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