Stocks closed on Friday in the red, with the tech-heavy Nasdaq Composite (^IXIC) down roughly 1.7% while the blue-chip Dow Jones Industrial Average (^DJI) and benchmark S&P 500 (^GSPC) shed 0.5% and 1%, respectively.

For the week, the Nasdaq fell about 1.5% while the Dow gained over 1%. The S&P 500, which shed 0.6% for the week, closed at a record high on Thursday.

With another 25 basis point cut in the rearview for the Federal Reserve, attention is likely to focus on machinations around the next Fed chair to replace Jerome Powell, with reports late Friday suggesting Trump sees either Kevin Hassett or Kevin Warsh being named to the post.

The week’s economic calendar will also continue to work through the backlog of delayed data from the government shutdown, with the November jobs report set for release on Tuesday and November inflation data due out Thursday morning.

In the corporate world, Wednesday will see Micron (MU) report quarterly results, while investors on Thursday will get results from Accenture (ACN), NIKE (NKE), FedEx (FDX), and Olive Garden owner Darden Restaurants (DRI).

The Federal Open Market Committee’s quarter-point rate cut on Wednesday marked the third such rate cut in 2025 and the most divisive of the year among the committee, with three dissents split across both sides of the move.

Now, market attention is turning to the potential for 2026 cuts — the Fed is projecting only one — and the drama around who President Trump will choose to replace Chair Jay Powell when his term ends in May.

Betting markets suggested Kevin Hassett, director of the National Economic Council, was the clear favorite, with Polymarket giving him a 73% chance at the nomination as of Friday morning.

A Friday afternoon report from the Wall Street Journal put Kevin Warsh, a former member of the Fed’s board of Governors, back in play. “I think you have Kevin and Kevin. They’re both — I think the two Kevins are great,” Trump told the Journal. “I think there are a couple of other people that are great.”

Following that report, Hassett’s and Warsh’s odds converged somewhat, with Hassett having closer to a 57% chance of getting the nod while Warsh sat at 39%. Ahead of the report, Warsh was seen as having a roughly 15% shot at the nomination.

Warsh and Hassett are both seen as being amenable to Trump’s preference for lower interest rates, and these expectations have helped strengthen a basket of international currencies against the dollar as the foreign exchange markets price in the impact of a Trump ally leading the Fed, said Thierry Wizman, global FX & rates strategist at Macquarie.

It’s not just the Hassett prospects that have USD weakening against other currencies, Wizman said, “but the broad-based nature of the FX rally in the past few days tells us that it is likely also driven by the news around the Fed’s next leader.”

Bond markets are also feeling out the potential for a dovish Fed aligned much more closely with the White House.

Bonds have long served as a “ballast against equity volatility” because a credible central bank committed to independence and price stability has made investors feel good about US Treasurys’ safe-haven role, Lawrence Gillum, chief fixed income strategist for LPL Financial, said.

If Hassett is to pick up the nomination, “the central question is whether that credibility will endure,” Gillum said.

“Markets appear willing to give him the benefit of the doubt — for now — but any perception that policy will systematically favor growth over price stability could risk unanchoring expectations and potentially impair the reasons why bonds have become an effective portfolio diversifier over the past quarter century.”

If the dismal performance of Oracle’s (ORCL) stock from its September peak says anything about investor sentiment toward Big Tech, perhaps it is that worries about AI overspending never went away, but may have just been temporarily pushed aside.

Oracle stock fell over 10% on Thursday after the company said its AI-related costs would be higher than expected. On Friday, the news got even worse, as Broadcom’s stock fell over 11% after its results showed margin pressures at the chipmaker.

Bloomberg also reported Friday that Oracle has internally pushed back the timelines on data centers it is contracted to build for tech darling OpenAI (OPAI.PVT). The Nasdaq fell 1.7% on Friday.

Microsoft (MSFT) also walked away from data center lease commitments worth roughly 2 gigawatts of electricity in the US and Europe after demand projections failed to keep up with the Big Tech company’s planned supply.

At the same time, debt issuance by hyperscaler companies — which have traditionally funded their exorbitant expenditures with deep pockets of cash — exploded this past fall, according to Bank of America (BAC) analysts.

Investment-grade bond market supply from Meta (META), Oracle, and a joint venture between Meta and Blue Owl Capital (OWL) alone totaled $75 billion through September and October — a “dramatic jump from the $37bn average annual pace of supply prior to Covid,” the analysts wrote.

But what the recent moves could signal, said Capital analyst Kyle Rodda, is a potential “changing of the guard” in the AI trade, which he called “a burgeoning theme in the market given valuation divergences, the AI investment cycle, and the productivity gains hoped for by market participants and projected by the Fed.”

“The next big beneficiaries of AI may no longer be chip manufacturers or hyperscalers,” Rodda wrote, “but businesses which will implement the technology to grow and be more productive.”

Shares of energy companies like Exxon Mobil (XOM), Chevron (CVX), and Shell (SHEL) typically move in tandem with oil prices.

But over the past two months, the two sides of the energy trade have divorced.

Prices on Brent crude (BZ=F), the international benchmark, and US benchmark West Texas Intermediate crude (CL=F) are down by 12% and 15%, respectively, over the past six months.

Meanwhile, the State Street energy sector ETF (XLE) — where Exxon, Chevron, and fellow US major ConocoPhillips (COP) make up more than one-third of the index — is up roughly 6% over the same timeframe.

The oil market faces a massive wave of oversupply in 2026, but the majors have been cutting costs and cleaning up their balance sheets so that even if — or when — oil prices drop, free cash flow stays flat or even increases.

Most analysts expect the international oil market to face a surplus equal to several million barrels per day next year as OPEC continues to unwind production cuts and US shale operators keep pumping oil at a record pace. Futures prices on Brent crude are predicted to drop into the $50s per barrel, if not further into the $40s or even $30s.

But the majors are writing plans for billions more in free cash flow over the next few years.

Exxon raised its earnings and free cash flow projections by $5 billion with no increase in capital spending in its latest long-term outlook report. At Chevron, Mike Wirth’s company is expecting the same metrics to grow by 10% annually while cutting capex by $3 billion.

Stock and commodity prices are a read on future performance, not today’s conditions. The Street is predicting a tough next few years as the coming glut properly arrives and prices fall before recovering. But in Houston, investors are seeing better and better numbers for the oil majors to come.

Economic and earnings calendar

Economic data: Empire State manufacturing, December (10.5 expected, 18.7 previously)

Earnings calendar: Navan (NAVN)

Economic data: Nonfarm payrolls, November (+50,000 expected); Average hourly earnings, month-on-month, November (+0.3% expected); Average hourly earnings, year-on-year, November (+3.6% expected); Unemployment rate, November (4.4% expected); Retail sales, month-on-month, October (+0.3% expected, 0.2% previously); S&P Global US manufacturing PMI, December preliminary reading (52.2 previously); S&P Global US services PMI, December preliminary reading (54.1 previously)

Earnings calendar: Lennar Corporation (LEN), Worthington Enterprises (WOR)

Economic data: MBA mortgage applications, week ended Dec. 12 (4.8% previously)

Earnings calendar: Micron Technology (MU)

Economic data: Initial jobless claims, week ended Dec. 13 (236,000 previously); Consumer price index, year-on-year, November (+3.1% expected); Core CPI, year-on-year, November (+3% previously); Philadelphia Federal Reserve business outlook, December (2.1 expected, -1.7 previously); Kansas City Federal Reserve manufacturing activity, December (8 previously)

Earnings calendar: Accenture (ACN), NIKE (NKE), Cintas Corporation (CTAS), FedEx (FDX), HEICO Corporation (HEI), Darden Restaurants (DRI), FactSet Research Systems (FDS), Birkenstock (BIRK), CarMax (KMX), KB Home (KBH), BlackBerry Limited (BB), Scholastic Corporation (SCHL), FuelCell Energy (FCEL)

Economic data: Existing home sales, November (4.15 million expected, 4.1 million previously); Existing home sales, month-on-month, November (1.1% expected, 1.2% previously); University of Michigan sentiment, December final reading (53.3 previously); Kansas City Federal Reserve services activity, December (-7 previously)

Earnings calendar: Paychex (PAYX), Carnival (CCL), Conagra Brands (CAG), Winnebago Industries (WGO)

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance