The S&P 500 Index ($SPX) (SPY) on Friday closed down -0.43%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.36%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.28%. March E-mini S&P futures (ESH26) fell -0.43%, and March E-mini Nasdaq futures (NQH26) fell -1.35%.
Stock indexes moved lower on Friday, with the Dow Jones Industrials falling to a 1.5-week low after President Trump said he is nominating Kevin Warsh to be the next Fed Chair. The 10-year T-note yield rose to a 1-week high, gold prices plunged to a 1.5-week low, and the dollar rose as Mr. Warsh, who often emphasized inflation risks as Fed Governor from 2006-2011, is seen as less supportive of deep interest rate cuts. Current Fed Chair Powell’s term ends in May.
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Stocks were also pressured on Friday after US December producer prices rose more than expected, a hawkish factor for Fed policy. US Dec PPI final demand rose +0.5% m/m and +3.0% y/y, stronger than expectations of +0.2% m/m and +2.8% y/y. Dec PPI ex food and energy rose +0.7% m/m and +3.3% y/y, stronger than expectations of +0.2% m/m and +2.9% y/y.
Mining stocks tumbled on Friday as precious metals prices plunged amid a rally in the dollar after President Trump named Kevin Warsh as the new Fed Chair. Precious metals have been in the midst of parabolic rallies with gold, silver, copper, and platinum posting all-time highs this week, so the naming of Warsh as the new Fed Chair fueled a wave of long liquidation pressure in metals on Friday.
Friday’s news was better-than-expected after the US Jan MNI Chicago PMI rose +11.3 to 54.0, stronger than expectations of 43.7 and the strongest pace of expansion in more than two years.
Fed comments on Friday were mixed for stocks. On the negative side, St. Louis Fed President Alberto Musalem said, “With inflation above target and the risks to the outlook evenly balanced, I believe it would be unadvisable to lower the fed funds rate into accommodative territory at this time.” Conversely, Fed Governor Christopher Waller said, “Monetary policy is still restricting economic activity, and economic data make it clear to me further easing is needed.”
On the positive side, President Trump said late Thursday that he reached a tentative deal with Senate Democrats to avert a US government shutdown. The deal would fund the Homeland Security Department for two weeks to allow more time for talks on immigration enforcement and contains full-year funding for several other government agencies. House Speaker Johnson said it would take 72 hours for the House to vote on the measure, meaning a partial government shutdown is likely, but the effect on federal operations would be minimal if it’s quickly resolved within a couple of days.
Q4 earnings season is in full swing, with 102 of the S&P 500 companies scheduled to report earnings this week. Earnings have been a positive factor for stocks, with 77% of the 143 S&P 500 companies that have reported beating expectations. According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4. Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.
The markets are discounting a 17% chance for a -25 bp rate cut at the next policy meeting on March 17-18.
Overseas stock markets settled mixed on Friday. The Euro Stoxx 50 closed up by +0.95%. China’s Shanghai Composite fell to a 3.5-week low and closed down -0.96%. Japan’s Nikkei Stock 225 closed down -0.10%.
Interest Rates
March 10-year T-notes (ZNH6) on Friday closed down by -1 tick. The 10-year T-note yield rose +1.0 bp to 4.241%. T-note prices were under slight pressure on Friday, and the 10-year T-note yield rose to a 1-week high of 4.277% on the news that President Trump will nominate Keven Warsh as the next Fed Chair. Mr. Warsh is seen as more hawkish than other Fed Chair candidates and often emphasized inflation risks during his tenure as a Fed Governor from 2006-2011. T-notes remained lower after US Dec producer prices rose more than expected and the Jan MNI Chicago PMI expanded at its strongest pace in more than two years, hawkish factors for Fed policy.
European government bond yields moved higher on Friday. The 10-year German bund yield rose +0.3 bp to 2.843%. The 10-year UK gilt yield rose +1.1 bp to 4.522%.
The Eurozone Dec unemployment rate unexpectedly fell -0.1 and matched a record low of 6.2%, showing a stronger labor market than expectations of no change at 6.3%.
ECB Dec 1-year inflation expectations were unchanged from Nov at 2.8%, stronger than expectations of a decline to 2.7%. The Dec 3-year inflation expectations unexpectedly rose +0.1 to a 2-year high of 2.6%, stronger than expectations of a decline to 2.4%.
Eurozone Q4 GDP rose +0.3% q/q and+1.3% y/y, slightly stronger than expectations of +0.2% q/q and +1.3% y/y.
German Jan CPI (EU harmonized) fell -0.1% m/m and rose +2.1% y/y, stronger than expectations of -0.2% m/m and +2.0% y/y.
Swaps are discounting a 2% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.
US Stock Movers
Chip makers and AI infrastructure stocks moved lower on Friday, weighing on the broader market. KLA Corp (KLAC) closed down more than -15%, and Western Digital (WDC) closed down more than -11%. Also, Seagate Technology Holdings Plc (STX) closed down more than -9%, and Advanced Micro Devices (AMD) closed down more than -6%. In addition, Lam Research (LRCX) and Applied Materials (AMAT) closed down more than -5%, and Microchip Technology (MCHP) and Micron Technology (MU) closed down more than -4%. Finally, ON Semiconductor (ON) closed down more than -3%, and Marvell Technology (MRVL), NXP Semiconductors NV (NXPI), and ARM Holdings Plc (ARM) closed down more than -2%.
Mining stocks sold off sharply on Friday, as gold prices sank more than -11% and silver prices plunged more than -31%. Coeur Mining (CDE) closed down more than -17%, and Hecla Mining (HL) closed down more than -15%. Also, Barrick Mining (B) closed down more than -12%, and Newmont Mining (NEM) closed down more than -11%. Finally, Freeport McMoRan (FCX) closed down by more than -7%.
Video game stocks fell on Friday amid fears of potential disruption from artificial intelligence after Google began rolling out Project Genie, which could upend the creation of video games. Unity Software (U) closed down more than -23%, Roblox (RBLX) closed down more than -12%, and Take-Two Interactive Software (TTWO) closed down more than -7%.
PennyMac Financial Services (PFSI) closed down more than -33% after reporting Q4 net revenue of $538.0 million, well below the consensus of $626.8 million.
Schneider National (SNDR) closed down more than -9% after reporting Q4 operating revenue of $1.40 billion, weaker than the consensus of $1.45 billion.
Appfolio Inc (APPF) closed down more than -8% after forecasting full-year revenue of $1.10 billion to $1.12 billion, weaker than the consensus of$1.13 billion.
Olin Corp (OLN) closed down more than -6% after saying “it expects Q1 2026 adjusted EBITDA to be lower than Q4 2025 levels.”
American Express (AXP) closed down more than -1% after reporting Q4 EPS of $3.53, below the consensus of $3.56.
Deckers Outdoor (DECK) closed up more than +19% to lead gainers in the S&P 500 after reporting Q3 net sales of $1.96 billion, better than the consensus of $1.87 billion, and raising its full-year net sales forecast to $5.40 billion-$5.43 billion from a previous estimate of $5.35 billion, stronger than the consensus of $5.36 billion.
Verizon Communications (VZ) closed up more than +11% to lead gainers in the Dow Jones Industrials after it said it added 616,000 new subscribers in Q4 and authorized a share buyback program of up to $25 billion shares.
Charter Communications (CHTR) is up more than +11% after reporting Q4 residential customers of 29.61 million, above the consensus of 28.70 million.
Sandisk (SNDK) closed up more than +6% after reporting Q2 revenue of $3.03 billion, well above the consensus of $2.67 billion.
Air Products and Chemicals (APD) closed up more than +6% after reporting Q1 sales of $3.10 billion, better than the consensus of $3.05 billion.
Colgate-Palmolive (CL) closed up more than +6% after reporting Q4 net sales of $5.23 billion, above the consensus of $5.13 billion.
Lumentum (LITE) closed up more than +3% after Morgan Stanley raised its price target on the stock to $350 from $304.
Earnings Reports(2/2/2026)
Aptiv PLC (APTV), DaVita Inc (DVA), Healthpeak Properties Inc (DOC), IDEXX Laboratories Inc (IDXX), NXP Semiconductors NV (NXPI), Palantir Technologies Inc (PLTR), Revvity Inc (RVTY), Simon Property Group Inc (SPG), Teradyne Inc (TER), Tyson Foods Inc (TSN), Walt Disney Co/The (DIS).
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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