• Nasdaq Composite drops 0.9% amid uncertainty over Kevin Warsh's nomination as Federal Reserve chair
  • Precious metals plunge sharply, with silver posting its worst day since 1980
  • Markets show partial recovery on positive manufacturing data, but volatility persists in tech and industrial sectors

U.S. stocks extended their decline on February 2, 2026, with the Nasdaq Composite falling 0.9% to close at 23,461.82, driven by investor concerns over President Trump's nomination of Kevin Warsh as the next Federal Reserve chair. The move sparked a sell-off in rate-sensitive technology and industrial stocks, with the Technology Select Sector SPDR fund (XLK) dropping 1.3% as Treasury yields climbed and the dollar strengthened.

According to people familiar with market dynamics, the nomination has created uncertainty about future interest-rate paths and monetary tightening, particularly given Warsh's perceived hawkish stance. This comes as the Producer Price Index rose 0.5% in December, signaling ongoing inflation pressures that could complicate the Fed's policy decisions.

"What institutional investors are really focused on is regulatory stability," one market strategist said, speaking on condition of anonymity. "This nomination introduces significant uncertainty at a time when markets were already grappling with inflation data and geopolitical tensions."

Markets showed some resilience on February 3, with the Nasdaq rising 0.56% to 23,592.11 following positive manufacturing data from the ISM, which showed the highest growth since August 2022. However, the recovery remained fragile as volatility persisted in precious metals and AI-related stocks.

The metals rout has been particularly severe, with gold falling 11% and silver plummeting 31% - silver's worst single-day performance since 1980. This hammered mining companies, with Newmont (NEM) dropping 11.5% and Coeur Mining (CDE) falling 16.9% amid what traders described as margin calls in the metals sector.

Tech stocks showed a divided response to the broader market pressures. Micron Technology (MU) surged on analyst upgrades tied to AI optimism, while Nvidia (NVDA) dipped following news about OpenAI's developments. AT&T (T) advanced after announcing a deal with Lumen Technologies (LUMN), while Disney (DIS) lagged following its earnings report.

Broader market indicators reflected the mixed sentiment. The S&P 500 declined 0.4% to 6,939.03 on February 2 before rising 0.54% the following day, while the Dow Jones Industrial Average fell 0.4% then recovered with a 1.05% gain. The VIX volatility index climbed 3.3% to 17.44, signaling heightened investor anxiety.

Looking ahead, market participants are watching several key developments. After-hours earnings from Palantir (PLTR) and upcoming reports from Alphabet (GOOGL) and AMD (AMD) could provide direction, while delayed January jobs data - postponed due to a partial government shutdown - remains a wild card. Some analysts note that if Warsh is confirmed, the initial uncertainty might resolve, but the immediate risk-off tone appears likely to persist.

Zacks Investment Research maintained a Strong Buy rating on Coeur Mining despite its sharp decline, suggesting some analysts see value in the beaten-down metals sector. Meanwhile, decliners outnumbered advancers by a 2-to-1 ratio on the Nasdaq, indicating broad-based selling pressure rather than isolated weakness.

*Correction: An earlier version of this article misstated the percentage decline for silver. It has been corrected to 31%.

Update: Markets partially recovered on February 3 following positive manufacturing data.