Market ended a busy week with modest gains as investors focused on corporate earnings, the Fed’s meeting, and the President’s nominee to be the next Fed Chair.
As expected, after three consecutive rate cuts, the Fed held rates steady, stating economic activity has been expanding at “a solid pace.” Speaking at his post-meeting press conference, Fed Chair Jay Powell said labor markets have shown recent signs of “stabilizing” following a period of gradual softening; the implication being that the Fed felt comfortable with overall economic conditions to leave rates unchanged.
On Friday, President Trump nominated former Fed Governor Kevin Warsh to replace current Fed Chair Jay Powell when his term ends in May. Warsh has long been viewed as a hawk (i.e. supportive of keeping rates higher to keep inflation under control), which was especially true following the Great Financial Crisis when he advocated against the Fed maintaining interest rates near 0% for an extended period. Warsh also criticized the Fed for its massive balance sheet expansion during and after COVID, arguing it contributed to the ensuing spike in inflation. More recently, Warsh has appeared open to lower rates to support economic activity. Market reaction to the announcement appeared mixed given Warsh’s evolving views on interest rates, however, the immediate reaction suggested they expect Warsh’s more hawkish views to prevail. That was evident by the rise in the dollar, which contributed to a precious metals selloff. Silver fell by as much as 36%, its largest intraday decline on record, before ending the day down 31%. Gold experienced its largest intraday decline since the early 1980s, before ending the day down 11%.
Through Friday, 33% of S&P 500 companies had reported 4Q25 earnings, with 75% of those companies beating their consensus estimate. According to industry group FactSet, consolidated earnings growth for 4Q25 is expected to be 11.9%, which if achieved, would mark the 5th consecutive quarter of double-digit earnings growth.
