8 Key Items That Are Shaping the Stock Market Friday
Trump’s Fed pick, gold and silver fall, a shutdown deal, and OpenAI’s IPO plans will all be in play as a busy trading week concludes.
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These are the early headlines and other items poised to influence the market at the start of the trading day Friday. As we share this collection of market drivers, U.S. equity futures are off their lows for the morning but still indicate a weaker market open.
1. President Donald Trump said he will nominate Kevin Warsh to succeed Jerome Powell as chair of the Federal Reserve, putting the former Fed board member atop an institution that Trump has relentlessly attacked for failing to cut interest rates. (Politico)
Warsh, who has criticized Fed Chair Powell publicly, is a former Fed governor and has advised Trump on economic policy. The choice is an interesting one considering Warsh’s reputation for being an inflation “hawk” and his past criticism that easy monetary policy would stoke inflation. However, he has been a more vocal supporter of lower rates. The question is, subject to the data, will he be able to sway other committee members to deliver the cuts Trump is looking for?
2. Both gold and silver are still set for hefty monthly gains, but Friday’s sell-off is the biggest shock to the rally since a similar slump in October. It was triggered by the dollar rebounding after a report the Trump administration was preparing to nominate Kevin Warsh for Federal Reserve chair, now confirmed. (Bloomberg)
While we are likely to see some members of the EPS Diplomats basket come under pressure in response today, let’s remember the month-to-date move in gold and silver will influence their guidance more than today’s move, as will the gains compared to average prices in Q1 2025 and Q4 2025.
3. President Donald Trump and Senate Democrats reached an agreement to fund the federal government as a Friday midnight deadline for a partial shutdown approaches. But the Senate’s hopes of quickly passing the deal, text of which is yet to be unveiled, ran into a snag Thursday night, with leadership sending senators home around 11 p.m. Senators hope to pass the deal Friday, but votes aren’t yet scheduled. (Politico)
Because the House is in recess and not scheduled to return until Monday, even if the Senate passes the deal on Friday, we are likely to see a temporary partial government shutdown. However, House Republicans are expected to hold a conference call this morning to prepare for that vote. Republicans and the White House aim to pass five spending bills to fund a large portion of the government for the remainder of the fiscal year, plus a stopgap measure to fund the Department of Homeland Security for two weeks while they continue negotiating guardrails to rein in immigration agents.
4. OpenAI is laying the groundwork for a public listing in the fourth quarter of this year, people familiar with the matter said, accelerating its plans as competition with rival Anthropic intensifies. (WSJ) SpaceX is in discussions to merge with xAI ahead of a blockbuster public offering planned for this year… (Reuters)
The firming up of those IPOs solidifies the expectation for another good year in investment banking activity, which is fodder for our positions in Morgan Stanley (MS) and Bank of America (BAC) . OpenAI’s current capital raise and IPO later this year should keep SuRo Capital (SSSS) in the spotlight as its net asset value rises further. Investments in OpenAI by Microsoft (MSFT) , Nvidia (NVDA) , and Amazon (AMZN) also stand to benefit.
5. Big US companies have this week revealed plans to lay off tens of thousands of workers, in the latest sign of how employers are trimming their workforces after years of robust hiring. Amazon, UPS, Dow, Nike, Home Depot, and other companies said they would eliminate more than 52,000 jobs combined, with several saying they needed to slim their organisations amid lingering economic uncertainty and mounting pressure to invest in AI. (FT)
As it relates to monetary policy and consumer spending, we’ll continue to track layoff announcements as the current earnings season continues. However, these and any other such announcements aren’t likely to show up until the February data.
6. President Trump has been presented in recent days with an expanded list of potential military options against Iran aimed at doing further damage to the country’s nuclear and missile facilities or weakening Iran’s supreme leader, according to multiple U.S. officials. (The New York Times)
We will want to keep a watchful eye over the weekend to see how this progresses and what the impact could be on energy prices.
7. Economic data today per TipRanks: Producer Price Index (December), Chicago PMI (January).
8. Companies reporting today per TipRanks: Air Products (APD) , American Express (AXP) , Charter Communications (CHTR) , Chevron (CVX) , Exxon Mobil (XOM) , SoFi Technologies (SOFI) , Verizon (VZ) .
At the time of publication, TheStreet Pro Portfolio was long MS, BAC, SSSS, MSFT, NVDA and AMZN.
