US stocks slip and dollar strengthens after Trump picks Warsh
US stocks fell as traders digested Donald Trump’s decision to nominate Kevin Warsh as Federal Reserve chair.
Wall Street’s S&P 500 closer 0.4 per cent lower on Friday and the tech-heavy Nasdaq Composite fell 0.9 per cent.
The dollar rose about 1 per cent against a basket of its main trading partners and a blistering rally in precious metals went into reverse.
The US president announced Warsh’s nomination as chair of the central bank on his Truth Social network, subject to Senate approval.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump said.
Warsh’s nomination represents a relatively conventional pick after months of deliberation at the White House.
ING analysts said Warsh “has been among the most market-friendly candidates”.
Precious metals tumbled as his nomination punctured a blistering rally that has also sent silver, copper and platinum to record highs this week.
Gold prices dived 10.4 per cent, falling back below $5,000 a troy ounce, while silver suffered its worst day on record, plunging 26.6 per cent to $85 an ounce.
Dollar jumps by the most in 8 months on Warsh nomination
The US dollar recorded its biggest one-day jump since May 2025 after Donald Trump’s decision to nominate former Federal Reserve governor Kevin Warsh to the central bank’s top job helped soothe investors’ nerves.
The dollar rose 0.9 per cent on Friday against a basket of six rivals, helping to reverse major losses this month.
Trump’s threats to take control of Greenland, as well as his claims that the US was seeking to pursue a weaker dollar, had driven investors out of the greenback and into other perceived stores of value, including gold and silver.
In addition to his about-face on Greenland and the weak dollar, the president’s decision to hire a relatively traditional Fed chair in Kevin Warsh — compared to other candidates seen as more likely to bend to the president’s repeated desire to cut interest rates regardless of inflation levels — sent traders back into the dollar.
Gold prices fell about 10 per cent while silver fell nearly 30 per cent.
The S&P 500 ended the day down 0.4 per cent.
El-Erian says Warsh sees reform as essential for protecting Fed independence
Mohamed El-Erian welcomed Kevin Warsh’s nomination as Federal Reserve chair, saying he had the requisite experience and was committed to reforming the central bank.
“He rightly sees these reforms as essential to making the institution more effective and less vulnerable to political interference,” the Wharton School professor and former Pimco chief executive said.
Warsh will inherit a divided rate-setting committee, which El-Erian said has been “excessively data dependent in decision-making” and is also “on high guard against outside influence”.
El-Erian said Warsh’s success will depend on his ability to align members of the rate-setting committee “on a cohesive forward-looking strategic view, including the role of AI in boosting productivity and raising the ‘speed limit’ for non-inflationary growth”.