Will Market Turbulence Spread Beyond Metals?

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Luke Vargas (0:17)

Volatility grips global markets as jittery investors sell off everything from gold to Bitcoin. Plus, the latest from Washington as Congress' bid to end a partial government shutdown gets tougher and Israel reconnects Gaza to Egypt in a major test of President Trump's peace plan.

Anat Pellad (0:35)

This is a very long-awaited moment for Gazans. So Gazans have not been able to have a crossing that allows them to leave and enter since the start of the war.

Luke Vargas (0:44)

It's Monday, February 2nd. I'm Luke Vargas for The Wall Street Journal. It's Monday, February 2nd. I'm Luke Vargas for The Wall Street Journal. And here is the AM Edition of What's News, the top headlines and business stories moving your world today.

A market sell-off that began on Friday is continuing this morning, with US stock futures tracking a drop in global stocks. Cryptocurrencies are also selling off, with Bitcoin trading below $77,000. But in a sign of potential stabilization, gold and silver prices have halted a slide that had gained steam over the weekend. Here with more is Wall Street Journal Markets reporter Chelsey Dulaney. Chelsey, bring us up to speed here. A week ago, this metals rally had seemed practically unstoppable, but we've seen a big unwinding, to put it mildly. What's going on?

Chelsey Dulaney (1:34)

Yeah, this is really all about metals. So over the past year, we've seen this incredible run-up in metals prices, gold, silver, just soaring. And last week it hit the wall. So we saw a huge drop-off in silver prices. We saw gold tumbling. And it looked like it was going to continue this morning, but it does seem to be stabilizing a bit. I think for investors, this has been a kind of mind-boggling rally. And there's a lot of reasons that people will give you for why gold was up over 60% in the past year, or why silver has doubled in price. And a lot of that has to do with concerns around the US., so debasement, whether the unpredictability of US policy was going to erode the value of the dollar. And one of the reasons why this might be turning around now is because last week Trump nominated Kevin Warsh as chair of the Federal Reserve. He's seen by investors as kind of a safe hand. He was a Fed governor. He has helped sort of ease some of those concerns about the independence of the Fed and whether the Fed is going to pursue lower interest rates because Trump wants them to.

Luke Vargas (2:37)

As you mentioned at the top, this is really about metals. Friday, truly a bloodbath for silver and gold, posting their worst one day sell off since the 1980s. Though this seems to be affecting a lot of assets beyond silver and gold. I mean, is there anything that's not selling off right now and why?

Chelsey Dulaney (2:53)

You have to look pretty far to find something that isn't selling off right now. It is such a widespread route across global markets. But, you know, we are seeing Treasury bonds rise today, so yields are going down as well. The dollar, which had been getting hit really hard over the past year and in particular over the past couple of weeks, has sort of stabilized and risen a little bit. So that actually should ease some concerns about the sell America trade. Treasuries are acting as they should. They're acting as a safe haven right now.

Luke Vargas (3:19)

Is that kind of the reassurance probably many retail investors are looking for? If they're worried, listening to all this, that a major correction is beginning to take shape.

Chelsey Dulaney (3:28)

How far this goes is up in the air. We've just seen such an incredible rush into metals over the past year, and it shifted from being something that was thought to be central bank driven, and now it's retail investors and these things, gold, this sort of safe haven, is now trading like a meme stock. So this might just be a positioning washout. This bet got so crowded, we've had a trigger, and so now it comes back a bit.

Luke Vargas (3:51)

That was Journal Markets reporter Chelsey Dulaney. Chelsey, thank you so much.

Chelsey Dulaney (3:53)

Thanks for having me.

Luke Vargas (3:58)

The US government is beginning the week partially shut down. The Senate passed a funding package to keep the lights on late Friday, but the House still needs to approve it, and its success there is far from given. House Minority Leader, Democrat Hakeem Jeffries called the Senate deal, which extends Department of Homeland Security funding for two weeks in order to allow for talks on reining in enforcement operations a step in the right direction. However, he said that many House Democrats believe that even two weeks of DHS funding is too much, and are demanding a series of changes to DHS operations, as he explained on ABC's This Week with George Stephanopoulos.