US Equity Indexes Muted, Treasury Yields Rise After Trump Appears to Rule Out Hassett as Next Fed Chair

04:51 PM EST, 01/16/2026 (MT Newswires) -- US equity indexes slipped, while government bond yields jumped on Friday after reports that National Economic Council Director Kevin Hassett may not be the frontrunner to become the next chair of the Federal Reserve.

The Nasdaq Composite slipped less than 0.1% to 23,515.39, the S&P 500 ended slightly lower at 6,940.01, and the Dow Jones Industrial Average declined 0.2% to 49,359.33.

On Friday, former Federal Reserve Governor Kevin Warsh emerged as the top choice for central bank chair following President Trump's remarks about another contender, National Economic Council Director Kevin Hassett, multiple news outlets reported. "I actually want to keep you (Hassett) where you are, if you want to know the truth. Kevin Hassett is so good," Trump was cited as saying in a Dow Jones report published by Morningstar.

Trump's reluctance to nominate Hassett as Fed chair contributed to declines in US stocks and bonds Friday morning, Tom di Galoma, a managing director at Mischler Financial Group, said in the Dow report. Hassett was the candidate regarded as most likely to advocate for lower rates.

After Trump spoke, traders on the predictions site Kalshi raised their bets to a 60% chance of Warsh getting the job, compared to just 16% for Hassett and 14% for Waller, CNBC reported, while adding that the duo was in a near dead heat as recently as Wednesday.

"Warsh has more credibility in the world of central banking," whereas "Hassett is perceived as someone who will do more of Trump's bidding," John Brady, managing director at RJ O'Brien, told Bloomberg. "Right or wrong, it doesn't matter. That's just the market's current perception."

Most US Treasury yields jumped, with the 10-year yield up 6.7 basis points to 4.23% and the two-year rate higher by three basis points to 3.59%. Bond prices and yields are inversely correlated.

In economic news, US industrial production rose by 0.4% in December, compared with expectations for a smaller 0.1% increase in a survey compiled by Bloomberg, and following an upwardly revised 0.4% increase in November.

Shares of power companies fell after multiple media outlets reported that the Trump administration is pushing for technology firms to shoulder the costs of new power plants in connection with a surge in the construction of artificial intelligence data centers. Constellation Energy (CEG) slumped 9.8%, among the worst performers on the S&P 500 and the Nasdaq. Vistra (VST) dropped 7.5%, among the laggards on the S&P 500.

PNC Financial Services (PNC) advanced 3.8% after the lender reported Q4 results above Wall Street's forecast amid net interest income gains and lower provision for credit losses. State Street (STT), however, reported a decline in Q4 earnings, and its shares slid 6.7%.

Gold futures slid 0.6% to $4,594.3 and silver futures dropped 3% to $89.61.

West Texas Intermediate crude oil futures rose 0.4% to $59.41 a barrel.

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