US equities: Fed chair drama triggers volatility as markets eye January payrolls

Warsh nomination sparks volatility and shifts policy expectations

United States (US) equity markets finished lower on Friday after a session of volatility, triggered by President Trump’s nomination of Kevin Warsh to succeed Jerome Powell as Federal Reserve (Fed) Chair. The move sparked a strong rally in the heavily shorted US dollar, and a brutal flash crash in precious metals, which spilled over into crypto markets.

The nomination of Kevin Warsh brings a degree of credibility and removes one layer of uncertainty currently plaguing markets. It remains to be seen how his traditionally hawkish leanings – which included pushing back against past Fed balance sheet expansion and advocating for higher interest rates due to inflation concerns – have evolved. More recently, he has shown a shift towards a more dovish stance. Consequently, he is expected to at least initially advocate for easier policy, in line with President Trump’s desired path for lower rates.

Earnings calendar turns busy

Looking ahead, this week features another busy fourth-quarter (Q4) earnings slate including Disney, Palantir, AMD, Super Micro Computer, Uber, Alphabet, Qualcomm, Snap, Amazon, MicroStrategy, Roblox, and Under Armour.

On the economic front, the key domestic event is the January non-farm payrolls report, previewed below.

Non-farm payrolls

Date: Friday, 6 February at 1.30pm GMT

For December, the US economy added just 50,000 jobs, falling short of expectations for a gain of around 60,000 and coming in below November’s downwardly revised figure of 56,000. Despite the weak headline number, the unemployment rate edged lower to 4.4%, down from a revised 4.5% in November, which had been the highest level since October 2021.

In last week’s Federal Open Market Committee (FOMC) press conference, Fed Chair Jerome Powell highlighted these mixed signals, noting, ‘Job gains have remained low, and the unemployment rate has shown some signs of stabilisation.’

The January non-farm payrolls report, covering the first full post-holiday month, is expected to show 70,000 jobs added. The unemployment rate is projected to remain steady at 4.4%.

The US rates market starts the week pricing in roughly 50 basis points (bp) of Fed cuts in 2026, with the first 25 bp move anticipated in July and another in December.

US unemployment rate chart

Nasdaq 100 technical analysis

After six straight sessions of gains to last Wednesday’s 26,165 high, the Nasdaq 100 fell away into the weekend. In the process, the index has left a potential double top, continued divergence between the three indices, and a ‘loss of momentum’ type weekly candle. Collectively, these factors suggest the Nasdaq 100 is attempting to form a high, though more confirmation is required.

Looking ahead, if the Nasdaq 100 were to fall below uptrend support at 25,200 (drawn from the November 23,854 low) and then see a sustained break below the 24,954 low from 20 January, it would set the stage for a deeper decline towards the 24,000 - 23,800 support level.

Aware that a sustained break above the 26,150 - 26,200 resistance area is needed to reignite the Nasdaq 100’s upside prospects.

Nasdaq 100 daily candlestick chart

S&P 500 technical analysis

After five straight sessions of gains culminating in last Wednesday’s 7002 high, the S&P 500 fell away ahead of the weekend.

In the process, the index shows continued bearish divergence on the relative strength index (RSI), as well as a divergence with the high-beta Nasdaq, which failed to confirm this high. Additionally, it formed a ‘loss of momentum’ weekly candle. Collectively, these factors suggest the S&P 500 is attempting to form a high, though more confirmation is required.

Should the S&P 500 fall below uptrend support at around 6850 (drawn from the November 6521 low) and then experience a sustained break below the 20 January low of 6789, it would set the stage for a deeper decline towards the 6500 - 6520 support level.

Conversely, a sustained break above the 6980 - 7000 resistance area is needed to reignite the S&P 500’s upside prospects, potentially targeting 7200.

S&P 500 daily candlestick chart

• _{Source: TradingView. The figures stated are as of 2 February 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}