U.S. futures slid on Monday as questions lingered over President Donald Trump’s nominee to be the next Federal Reserve chair and jitters over a possible AI bubble resurfaced.
Futures for the S&P 500 sank 0.7% before the bell, while futures for the Dow Jones Industrial Average fell 0.4%. Nasdaq futures were off 0.7%.
Oil prices tumbled more than 5% at one point overnight. Gold and silver, which had been on a tear before plunging on Friday, regained some of those losses but remained well off of recent highs. The price of gold rose 1.3% to about $4,800 per ounce, while silver gained 5.9% to $83.19.
Bitcoin stabilized somewhat after falling 12% since Wednesday. It was up about 1.5% to just over $78,000, though many cryptocurrency-related companies continued to slide. Crypto trading platform Coinbase was down 3.7% in early trading and bitcoin holder Strategy, formerly MicroStrategy, tumbled 7.6%.
This week brings another big batch of corporate earnings reports for investors to interpret, along with three separate sets of government data on the labor market, including the Friday’s January jobs report.
Walt Disney Co. shares ticked up less than 1% early Monday after the entertainment giant posted strong first quarter results, powered by box-office hits “Zootopia 2” and “Avatar: Fire and Ash.”
Revenue for Disney Entertainment, which includes the company’s movie studios and streaming service, climbed 7%, while revenue for the Experiences division, its parks, rose 6%.
Investors are still considering how Kevin Warsh, Trump’s nominee to lead the Federal Reserve, might handle interest rates. Trump has been highly critical of current Fed Chair Jerome Powell, whose term ends in May.
Warsh’s nomination requires Senate approval. But financial markets fear the Fed may lose some of its independence because of Trump, who has pushed hard for more and faster rate cuts. That fear has helped catapult skyward the price of gold and weaken the U.S. dollar’s value over the last year.
“People do not get handed the keys to the most powerful central bank on earth because they plan to drive in the opposite direction of the people who gave them the keys,” Stephen Innes of SPI Asset Management said in a commentary.
The Fed chair has a big influence on the economy and markets worldwide by helping to dictate where the U.S. central bank moves interest rates. That affects 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.
A report released Friday showed U.S. inflation at the wholesale level was hotter last month than economists expected. That could put pressure on the Fed to keep interest rates steady for a while instead of cutting them, as it did late 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 to tamp down economic growth for a while.
South Korea’s exchange, which is heavily influenced by tech-related developments, briefly suspended trading as its benchmark Kospi bounced, closing 5.3% lower at 4,949.67. Samsung Electronics gave up 6.3%, while chipmaker SK Hynix sank 8.7%.
The Kospi has been forging records for weeks as Big Tech companies piggybacked on the AI craze with deals with major players like chipmaker Nvidia and OpenAI.
At midday in Europe, Germany’s DAX rose 0.8%, while the CAC 40 in Paris rose 0.6%. Britain’s FTSE 100 jumped 0.7%.
U.S. benchmark crude oil lost $3.19, or 4.9%, to $62.02 per barrel, while Brent crude, the international standard, fell $3.16 to $66.16 per barrel. Natural gas, which had soared in recent weeks as the U.S. suffered widespread cold and winter storms, was down 17%.
Speaking to reporters during the weekend, Trump said Iran should negotiate a “satisfactory” deal to prevent the Middle Eastern country from getting any nuclear weapons.
“I don’t know that they will. But they are talking to us. Seriously talking to us,” he said.
That comment apparently assuaged some worries over potential disruptions to oil supplies that had pushed prices higher, analysts said.
In Tokyo, the Nikkei 225 gave up early gains, sinking 1.3% to 52,655.18.
Hong Kong’s Hang Seng dropped 2.2% to 26,775.57, while the Shanghai Composite index sank 2.5% to 4,015.75.
