Stocks fell on Wall Street, while gold and silver prices plunged as investors tried to gauge what President Donald Trump’s new nominee to lead the Federal Reserve will mean for interest rates. The S&P 500 dropped 0.4% after sinking as much as 1.1% earlier on Friday. The Dow Jones Industrial Avera.
— Financial markets churned on Friday as investors tried to figure out what President Donald Trump’s new nominee to lead the Federal Reserve will mean for interest rates.
U.S. stocks fell, with the S&P 500 down 0.4% after sinking as much as 1.1% earlier in the day. The Dow Jones Industrial Average dropped 179 points, or 0.4%, and the Nasdaq composite lost 0.9%.
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The value of the U.S. dollar rallied, but only after swiveling a couple times following Trump’s nomination of Kevin Warsh. And some of the wildest action was again in precious metals markets, where gold and silver prices plunged following their stellar runs over the last year.
Whoever leads the Fed has a big influence on the economy and markets worldwide by helping to dictate where the U.S. central bank moves interest rates. Such decisions lift or weigh on prices for all kinds of investments, as the Fed tries to keep the U.S. job market humming without letting inflation get out of control. Trump has been pushing for lower interest rates, which usually help goose the economy but can also cause higher inflation.
A fear in financial markets has been that the Fed will lose some of its independence because of Trump. That fear in turn helped catapult the price of gold and weaken the U.S. dollar’s value over the last year.
The longtime assumption has been that the Fed should operate separately from the rest of Washington so that it can make moves that are painful in the short term but necessary for the long term. To get inflation down to the Fed’s goal of 2%, for example, may require the unpopular choice to keep interest rates high and grind down on the economy for a while.
