Fresh concerns over potential AI-driven disruption across the technology sector triggered a selloff in U.S. stocks. The launch of new coding tools led investors to question whether AI could erode demand for software developers and data services—leading to a turbulent week on Wall Street that saw the tech-heavy Nasdaq Composite slip to its lowest levels of the year. Also this week, the outlook for interest rates and the U.S. economy was in focus after the nomination of Kevin Warsh to lead the Federal Reserve. President Donald Trump announced last Friday that he would nominate Warsh, a former Fed governor, to replace Jay Powell as chair, leading investors to envision potential shifts in monetary policy to come. In a Wall Street Journal op-ed in November, Warsh argued that the Fed should shrink its balance sheet to help tame inflation, allowing the central bank to lower borrowing costs for Main Street.

Investors continued to price in two rate cuts in 2026, according to the CME Group’s FedWatch Tool, as fresh economic indicators added to signs of sustained growth. The Atlanta Fed’s GDPNow model placed the U.S. on track to post 4.2% growth for the fourth quarter. Manufacturers broke a 12-month slump in January with the sector recording its strongest rate of expansion since August 2022, a survey from the Institute for Supply Management showed on Monday. The jobs report previously scheduled for this week will be delayed because of a partial government shutdown impacting a handful of federal agencies, including the Labor Department. Economists had estimated that payrolls increased 60,000 with the unemployment rate holding at 4.4%, according to a Dow Jones poll. Despite a resilient economy, “slow job growth is not a comfortable place to be,” Richmond Fed President Tom Barkin said in a Tuesday speech.

PGIM’s latest Weekly View from the Desk takes a closer look at Warsh’s monetary policy beliefs and their potential market ramifications.