Wall Street Reacts to Trump's Fed Chair Nomination of Kevin Warsh

Feb 1, 2026, 2:23 AM

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President Donald Trump has officially nominated Kevin Warsh, a former Federal Reserve governor, to lead the central bank. If confirmed by the Senate, Warsh will replace current Fed Chair Jerome Powell, whose term ends in May.

Trump expressed strong confidence in Warsh, stating, "I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best." He referred to Warsh as "central casting" and anticipated he would not let the public down.

Following the announcement, US stocks experienced a dip as investors assessed the implications of Warsh's potential leadership on interest rates. The S&P 500 fell 0.43%, marking its third consecutive day of losses, while the Dow Jones Industrial Average and the Nasdaq Composite also saw declines.

Despite the stock market retreat, the US dollar and Treasury yields rose, suggesting that many investors view Warsh's nomination favorably. Analysts believe that his appointment could ease concerns regarding the Fed's independence, given his previous experience and his more cautious approach to monetary policy.

Warsh is known for his critical stance on the Fed's recent policies and has argued for lower interest rates, aligning with Trump's views. He previously served as a Fed governor from 2006 to 2011, during a tumultuous period that included the financial crisis.

Notably, Warsh's nomination may encounter hurdles in the Senate, especially from Republican members. North Carolina Senator Thom Tillis has indicated that he would oppose any Fed chair nominee until the ongoing investigation into Jerome Powell by the Department of Justice is resolved.

Market analysts have described Warsh as a moderate choice amidst the political turbulence surrounding the Fed. Richard Saperstein, chief investment officer of Treasury Partners, noted that Warsh is well-regarded in market circles and is expected to uphold the central bank's independence, which is crucial for maintaining credibility in monetary policy.

In the broader context of the market, Warsh's nomination comes after the central bank opted to hold interest rates steady in a range of 3.5%-3.75%. This decision followed months of deliberation and reflects ongoing debates within the Fed regarding the direction of monetary policy.

Overall, while Trump's pick of Kevin Warsh has sparked immediate reactions from Wall Street, the nomination's success hinges on Senate confirmation amidst a backdrop of political scrutiny and market volatility.

As the situation develops, stakeholders will be closely monitoring both the Senate's response and the broader implications for economic policy under a potential Warsh-led Federal Reserve. The upcoming months will be critical as the nomination process unfolds and the financial markets react to any new developments.

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