Stocks Fall as Investors Digest Fed Announcement

Financial markets churned on Friday as investors tried to figure out what President Trump's selection of a new leader of the Federal Reserve will mean for interest rates.

• The Dow fell 179.09 points, or 0.4%, to 48,892.47, closing the week down 0.4%.
• The S&P 500 fell 29.98 points, or 0.4%, to 6,939.03, ending the week up 0.3%.
• The Nasdaq composite fell 223.30 points, or 0.9%, to 23,461.82, falling 0.2% for the week.

The value of the dollar rallied, the AP reports, but only after swiveling a couple of times following Trump's announcement about Kevin Warsh. And some of the wildest action Friday 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 US central bank moves interest rates. Such decisions lift or weigh on prices for all kinds of investments, as the Fed tries to keep the US 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 US dollar's value over the past 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. The big question is what Warsh's nomination, which requires approval from the Senate, means for the Fed's independence.

On Wall Street, stocks of metals miners tumbled as the price of gold dropped 11.4% to settle at $4,745.10 per ounce. Gold's price suddenly ran out of momentum following a tremendous rally where it roughly doubled over 12 months. It topped $5,000 for the first time on Monday and was around $5,600 at one point on Thursday. Silver, which had been on a similar, jaw-dropping tear, fell even more. It plunged 31.4%. Friday's drops for metals prices helped send the stock of miner Newmont down 11.5%. Freeport-McMoRan, another miner, dropped 7.5%. Helping to limit the market's losses was Tesla, which rose 3.3% after dropping on Thursday despite delivering better profit reports for the latest quarter than analysts expected. Apple added 0.5% after the iPhone maker reported a stronger profit for the latest quarter than analysts expected.