February 3 Market Recap: U.S. Stocks and Gold Rally Amid Ongoing Fed Independence Crisis
TechFlow Selected TechFlow Selected
February 3 Market Recap: U.S. Stocks and Gold Rally Amid Ongoing Fed Independence Crisis
The nonfarm payrolls report is the most important data release of the week.
Navigating Web3 tides with focused insightsBy Mamengniu, TechFlow
Gold: From “Epic Collapse” to “Epic Rebound”
Spot gold closed today at $4,826 per ounce, surging 3.56% in a single day.
This is a textbook “V-shaped reversal.” Last Friday, gold suffered its steepest one-day drop since 1980—plummeting from a record high of $5,600 to around $4,400, a decline exceeding 10%. Silver fared even worse, crashing 28% in one day—the largest single-day drop in over 40 years.
The trigger for the plunge was, of course, Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair.
Who is Warsh? A former Fed governor and a quintessential hawk who advocates tighter monetary policy. The market’s logic chain runs as follows: Warsh’s appointment → interest rates remain elevated—or even rise further → stronger U.S. dollar → reduced appeal of gold.
Yet today’s rebound signals something important: the market is repricing.
Investors are realizing two things:
- Nominating Warsh does not mean immediate tightening. His earliest possible start date is May; panic selling now may therefore be excessive.
- The “de-dollarization narrative” for gold remains intact. Over the past three years, central banks have aggressively accumulated gold—not because of Fed easing, but due to long-standing distrust in the U.S. dollar-based monetary system. Trump’s interference with the Fed’s independence only intensifies such concerns.
Technically, last Friday’s crash triggered widespread stop-loss orders and margin calls (the CME raised gold futures initial margin requirements from 6% to 8%, and silver’s from 11% to 15%). This mechanical wave of selling deepened the decline—but also flushed out leveraged positions, clearing the way for a rebound.
Today’s rally is essentially a “correction of an overreaction.” Gold’s long-term fundamentals remain solid: geopolitical uncertainty, persistent long-term pressure on the U.S. dollar, and the global trend toward de-dollarization. JPMorgan reiterated its year-end 2026 price target of $6,300. Deutsche Bank maintains its $6,000 target.
In the near term, gold may consolidate between $4,500 and $5,000, awaiting clear signals from the Fed’s meeting at the end of February.
Bitcoin: Struggling in the $78,000 “Quagmire”
Bitcoin is currently trading at $78,700—up 2% over 24 hours, yet down over 10% week-to-date.
Over the weekend, bitcoin briefly dipped below $75,000, hitting a two-month low. Though it posted a modest rebound today, it remains in a state of “bleeding.”
Why the decline?
- Deteriorating macro environment. The collapse in gold triggered a breakdown in risk-aversion sentiment, spilling over into all risk assets. Though often dubbed “digital gold,” bitcoin behaves more like a high-beta tech stock during panics.
- Leverage liquidations. Thin weekend liquidity led to forced liquidation of over $500 million in long positions. Shallow order books mean even minor sell-side pressure can breach key support levels and trigger cascading margin calls.
- A lack of new catalysts. Trump’s promised “Strategic Bitcoin Reserve” has yet to materialize. Markets are watching closely: Is this real policy—or just pre-election rhetoric?
Ethereum is weaker still, trading at $2,340—down 19% week-to-date. The ETH/BTC ratio has fallen to 0.030, a multi-year low. Ethereum’s ecosystem challenges persist; without a breakout application, its relative weakness versus bitcoin is unlikely to reverse.
Altcoins are universally in distress. Aside from a handful of projects with genuine revenue streams (e.g., Hyperliquid), most altcoins are merely fighting for survival. Market “wealth concentration” has intensified: capital flows exclusively to bitcoin and a select few top-tier assets.
Bitcoin’s near-term support lies at $75,000; a break below would likely target $70,000. Resistance sits in the $82,000–$85,000 range.
U.S. Equities: Rebounding from Panic—but the Tightrope Walk Has Just Begun
U.S. equity indices rose across the board on Monday, February 3
- Dow Jones Industrial Average: 49,407 (+1.05%, +515 points)
- S&P 500: 6,976 (+0.54%)
- Nasdaq Composite: 23,592 (+0.56%)
This was a classic “panic-recovery rally.” After last Friday’s fear-driven selloff—triggered by gold’s 11% plunge and silver’s 28% nosedive—today’s strong rebound reflected market confidence that “doomsday isn’t imminent.”
Three pillars supporting the rally:
Stronger-than-expected manufacturing data. The U.S. ISM Manufacturing PMI for January rose to 52.6—well above the consensus forecast of 48.3—and marked the first expansionary reading in a year. This reassured markets that the economy isn’t as fragile as feared.
AI infrastructure stocks led gains. Apple rose 4.1%, Micron Technology gained 5.5%, and SanDisk surged 15.4%. The strength in memory-chip stocks reflects sustained optimism about demand for AI infrastructure. Though NVIDIA fell 2.9% amid news that its planned $100 billion investment in OpenAI had stalled, the broader AI narrative remains intact.
Transportation stocks hit record highs. The Dow Jones Transportation Average rose ~2%; United Airlines and Delta Air Lines climbed 4–5%; FedEx reached an all-time high—the highest since its 1978 IPO. Strength in transport stocks is typically a leading indicator of accelerating economic activity.
Yet cracks within the market are plainly visible:
Disney plunged 7%, with earnings revealing falling profits and rising costs. Slowing consumer spending is beginning to hit the entertainment sector.
Strategy fell 6.7%, reflecting ongoing crypto weakness.
More critically, the nonfarm payrolls report—originally scheduled for February 6—has been postponed. This rare delay means markets will navigate longer “blindly”: absent critical data, the likelihood of a March Fed rate cut (currently estimated at ~40–50%) becomes even more uncertain.
The Core Market Conflict: The Fed’s Independence Crisis
The violent volatility across all asset classes stems from a single question: Can the Fed remain independent?
Trump’s nomination of Warsh sends a powerful political signal. Warsh is a longtime Trump ally, widely seen as more likely to defer to the White House. This breaks the Fed’s traditional image of “political neutrality.”
Markets fear two extreme scenarios:
- Scenario A: Warsh stays uncompromisingly hawkish. Rates remain elevated for extended periods, the dollar strengthens, and both gold and bitcoin face continued pressure—while equities suffer as corporate profits erode under high rates. A “lose-lose” outcome.
- Scenario B: Warsh becomes “Trump’s tool.” Yielding to political pressure, he cuts rates to align with fiscal expansion. Risk assets rally short-term—but long-term dollar credibility collapses and inflation spins out of control. A “slow poison.”
Either scenario damages the Fed’s credibility. That’s what’s truly spooking markets.
Gold’s rebound today is effectively a bet on Scenario B.
Weakened Fed independence implies declining long-term dollar credibility—and enhances gold’s value as the “ultimate currency.”
Bitcoin’s persistent weakness reflects its awkward position in this narrative: if the Fed turns genuinely hawkish, tightening liquidity hurts risk assets; if the Fed becomes a political instrument, bitcoin’s “decentralized” narrative rings hollow—how can it credibly oppose “fiat hegemony” when even the Fed can’t preserve its independence?
Key Events This Week: Data Will Set the Direction
Tuesday, February 4: U.S. ADP employment report, ISM Services PMI
Wednesday, February 5: U.S. initial jobless claims
Thursday, February 6: Nonfarm payrolls report, University of Michigan Consumer Sentiment Index
The nonfarm payrolls report is the most critical data release this week.
If the data is strong (e.g., >250,000 jobs added), markets will interpret it as “no justification for Fed rate cuts,” pushing the dollar higher and pressuring gold and bitcoin in the near term.
If the data is weak (<150,000 jobs added), markets will bet on a “forced Fed cut,” triggering a rally in risk assets and further gains for gold.
Current market consensus: No rate cut in February; odds for March rise to ~40%.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
深潮TechFlow
