January Ends Quietly After Whiplash Week: Warsh Nomination Triggers Precious Metals Collapse, Tech Stumbles on Spending Fears

A Volatile Week Masking Modest Monthly Gains

The S&P 500 and Dow logged gains of 1.4% and 1.7%, respectively, for January, while the Nasdaq notched a 1% gain. Yet beneath these muted monthly returns lies a story of dramatic reversals, sector rotations, and late-week turmoil sparked by President Trump's Fed chair nomination.

Friday's session saw the S&P 500 fall 29.98 points, or 0.4%, to 6,939.03. The Dow Jones Industrial Average fell 179.09 points, or 0.4%, to 48,892.47. The Nasdaq composite fell 223.30 points, or 0.9%, to 23,461.82. The weakness capped three consecutive down days for equities as markets reassessed the implications of Kevin Warsh's nomination to lead the Federal Reserve.

The Warsh Effect: Dollar Rallies, Precious Metals Crater

Silver is suffering through a historic drop on Friday, as its move to all-time highs quickly unwound following the nomination of Kevin Warsh for Fed chair. Gold and silver plunged, putting the brakes on runaway rallies. Gold's price dropped 11%, and silver plummeted more than 30%.

The selloff reflects market recalibration around Warsh's hawkish credentials. The former Fed governor has a hawkish record on interest rates but has recently voiced support for cuts — which Trump has aggressively campaigned for. Warsh's selection was likely to ease concern about Fed independence because of his experience as a Fed governor and strong stance at times against inflation. While he is likely to push for lower rates in short term as Trump wants, the financial markets view him as someone who wouldn't always follow the president's direction and maintain credibility for monetary policy.

Big Tech Earnings Spark Divergence

The week's earnings deluge revealed a fundamental divide in investor sentiment toward technology giants. Apple earned $2.84 per share for the quarter, higher than the $2.67 per share expected by analysts surveyed by LSEG. Revenue came out at $143.76 billion, significantly exceeding analysts' expectation of $138.48 billion. Overall iPhone revenue surged 23% on an annual basis to $85.27 billion in revenue.

However, Microsoft's results spooked investors. Microsoft dragged down the benchmark with a roughly 10% slide, posting its worst day since March 2020. That's after the "Magnificent Seven" member reported that cloud growth slowed in the fiscal second quarter. The company also issued soft guidance on operating margin for the fiscal third quarter. Meta Platforms shares popped nearly 9%. The social media giant called for first-quarter sales to range from $53.5 billion to $56.5 billion, topping the analysts' consensus call for $51.41 billion. Fourth-quarter earnings came in at $8.88 per share on revenue of $59.89 billion, while the LSEG consensus sought $8.23 per share and $58.59 billion.

Small-Cap Strength Continues

The small cap-focused Russell 2000 jumped more than 5% in the month. Returns on the Dow and small-cap Russell 2000 — up 3.5% on the month — also revealed a rotation in leadership, as market breadth expanded and value stocks took over from growth. This divergence from mega-cap tech signals meaningful portfolio repositioning as investors hunt for earnings growth beyond the AI narrative.

The Week Ahead

Markets enter February with the Warsh nomination pending Senate confirmation and economic data taking center stage. Investors should monitor inflation readings, employment reports, and any commentary from Fed officials regarding future rate trajectories as policy uncertainty weighs on positioning.