Semiconductor Slump And Fed Nominee Roil Wall Street

The New York Stock Exchange (NYSE) closed with a mixed performance on January 31, 2026, as investors grappled with a whirlwind of market shocks, sector swings, and renewed volatility. The day’s trading session saw the Dow Jones Industrial Average edge upward by 179.09 points, or 0.36%, to finish at 48,892.47, according to reporting by 매거진한경. Meanwhile, the S&P 500 index managed a 0.43% gain, ending at 6,939.03. But not all was rosy—technology stocks took a hit, with the Nasdaq Composite index slipping by 0.94% to close at 23,461.82.

Much of the market’s unease stemmed from a dramatic slump in the semiconductor sector. Memory chip prices, which had been riding high on demand for AI infrastructure, tumbled about 30%. This sudden drop sent ripples through the market, raising concerns about a possible domino effect across other technology and commodity-linked sectors. Specifically, DRAM prices fell by approximately 10%, and NAND memory dropped by 6%, deepening the sense of uncertainty among tech investors.

Market strategists pointed to excessive leverage among short-term investors as a key factor behind the day’s turbulence. Matt Maley, chief market strategist at Miller Tabak, explained to 매거진한경, “There was excessive leverage in silver, which was the most favored asset among short-term investors recently. Today’s collapse triggered large-scale margin calls, leading to a sell-off in stocks and other assets.” The fear of margin calls—demands from brokers for additional capital to cover losses—quickly spread beyond the commodity pits, unsettling equity markets as well.

Adding fuel to the fire was the appointment of Kevin Warsh as the nominee for Federal Reserve Chair. Wall Street largely views Warsh as a stable and independent figure, but his hawkish stance on monetary policy—favoring tighter liquidity and a reduction in the Fed’s balance sheet—sparked anxiety among investors. Swissquote Bank’s Ipek Ozkardeskaya commented, “After Warsh’s name surfaced, a hawkish tone swept through the market.” That sentiment was evident in the performance of the Russell 2000, which tracks small- and mid-cap stocks that typically benefit from lower interest rates. The index dropped 1.55% as hopes for an imminent rate cut faded.

Meanwhile, the AI infrastructure boom, which had propelled metals like silver and copper to dizzying heights, showed signs of faltering. Microsoft, a bellwether for the sector, posted lackluster results in its fourth-quarter cloud division. While Microsoft’s AI chip division managed a 4% uptick, the disappointment in cloud service growth rattled investors who had bet big on continued AI-driven expansion. The result? Renewed chatter about a possible “AI bubble” and a broad-based sell-off in semiconductor stocks.

The Philadelphia Semiconductor Index, a closely watched barometer of chipmakers, plummeted 3.87%. Of the 30 companies in the index, all but Broadcom closed in the red. KLA, a major player in semiconductor equipment, saw its shares nosedive more than 15% amid concerns about slowing growth. Other heavyweights weren’t spared either—AMD lost 6.13%, Lam Research dropped 5.93%, and Micron Technology fell 4.80%. In contrast, Sandisk bucked the trend, soaring 6.85% after reporting robust fourth-quarter earnings.

The carnage wasn’t confined to tech. The collapse in commodity prices hit mining stocks hard. Newmont, the world’s largest gold miner, plunged over 11%, while Freeport-McMoRan and Albemarle sank 7% and 5% respectively. The interconnectedness of commodity and tech markets was on full display, as the sell-off in one sector quickly spilled into others.

Amid the turmoil, the Chicago Board Options Exchange (CBOE) Volatility Index, better known as the VIX, jumped 3.32% to 17.44. Often dubbed Wall Street’s “fear gauge,” the VIX’s rise underscored the mounting anxiety among investors as they digested the day’s rapid-fire developments.

Despite the gloom, there were glimmers of resilience. Microsoft’s AI chip unit, for instance, defied the broader downtrend with a 4% gain, thanks to robust performance in its four-minute cloud service. This bright spot offered hope that, even in a volatile environment, pockets of innovation and growth could still shine through.

The day’s events also reignited debate over the sustainability of the AI infrastructure boom. For months, metals like silver and copper had surged on expectations of massive investment in AI data centers and power grids. But as Microsoft’s cloud growth faltered and semiconductor prices tumbled, some analysts began to question whether the sector’s meteoric rise was built on solid ground. The specter of an “AI bubble” loomed larger, with investors nervously watching for signs of further cracks.

The broader context for these market moves is a global economy still wrestling with the aftershocks of the pandemic, shifting monetary policy, and geopolitical uncertainty. The appointment of a hawkish Fed chair, in particular, has injected a fresh dose of unpredictability into markets already on edge. Investors are now recalibrating their expectations for interest rates, liquidity, and risk appetite—setting the stage for more turbulence in the weeks ahead.

Looking at the numbers, the Dow’s modest rise stood in stark contrast to the tech-heavy Nasdaq’s decline—a reminder that not all sectors are moving in lockstep. While traditional blue-chip stocks found some support, high-growth tech names bore the brunt of the sell-off, reflecting shifting investor sentiment in a rapidly changing landscape.

Commodity markets, too, are in flux. The dramatic fall in silver, gold, and copper prices has upended long-held assumptions about the direction of global growth and inflation. For investors accustomed to riding the AI and commodity boom, the events of January 31 served as a wake-up call—a stark reminder that markets can turn on a dime.

In the end, the day’s trading session encapsulated the push and pull of hope and fear that defines financial markets. With volatility on the rise and key sectors under pressure, investors are bracing for more twists and turns. As the dust settles, one thing is clear: uncertainty is back in a big way, and navigating these choppy waters will require equal measures of caution and courage.