5 things to know before the stock market opens Friday

Happy Friday. President Donald Trump has made his decision on who he’ll nominate to be the Federal Reserve’s next chair, and it turns out that it was one of the “Kevins” after all.

Stock futures are lower this morning. The S&P 500 is coming off a second day of minor losses.

Here are five key things investors need to know to start the trading day:

Trump will nominate former Fed Governor Kevin Warsh to be the U.S. central bank’s next chairman, he announced this morning. “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump said on social media.

As CNBC’s Jeff Cox notes, the pick isn’t likely to rattle markets given Warsh’s central bank pedigree, as well as a belief on Wall Street that he will remain politically independent. But Warsh will need Senate confirmation — a process that could be difficult given Republican Sen. Thom Tillis’ pledge to block any Fed nominees until the criminal investigation into current Fed Chair Jerome Powell concludes.

An administration source told CNBC that Warsh was at the White House yesterday, as speculation narrowed in on the former Fed governor as Trump’s pick. The other finalists for the role were believed to be National Economic Council Director Kevin Hassett, current Fed Governor Christopher Waller and BlackRock’s Rick Rieder. 

The iShares Expanded Tech-Software Sector ETF (IVG) recorded its worst day since April yesterday, dragged down by post-earnings slides in ServiceNow and Microsoft. The fund is now down around 22% from its recent high, meaning the software industry has officially fallen into bear market territory.

Here’s what to know:

Microsoft tumbled 10% in its worst session since 2020, wiping out more than $350 billion in market cap. While the company exceeded expectations on both lines in its earnings report Wednesday, Microsoft reported softening cloud growth and gave a weak outlook for operating margins.ServiceNow also dropped around 10% in yesterday’s session. The enterprise software company beat analysts’ earnings expectations, but Wall Street’s worries around how artificial intelligence could disrupt the sector outweighed the positive results.IVG is on track to register its biggest monthly loss since 2008, in further proof of just how much the tide has turned on the industry that was once a Wall Street darling.Losses in the software sector dragged on the technology-heavy Nasdaq Composite, which underperformed in yesterday’s session.Still, the three major indexes are on track to end the trading month — which concludes with today’s closing bell — in the green. Follow live markets updates here.

Trump endorsed a Senate deal yesterday that would fund most of the government through the end of the fiscal year. As CNBC’s Garrett Downs reports, his support should help get the funding package across the finish line and avoid a partial government shutdown set to start early Saturday morning.

The revised deal would approve funding for several departments, including the Departments of Education, Defense, Treasury, State and Transportation. Notably absent from that group is the Department of Homeland Security, which Democrats demanded be removed from the bill after two U.S. citizens were killed by federal immigration agents in Minnesota this month. Senate Democratic Leader Chuck Schumer’s said DHS would instead be funded by a stopgap for two weeks.

At least a partial government shutdown still looks likely after objections from lawmakers on both sides of the aisle delayed a vote in the Senate last night.

Apple blew past Wall Street’s expectations on both lines for its fiscal fourth quarter yesterday. The personal technology titan also topped forecasts for iPhone and iPad revenue but missed analysts’ estimates for some other products, as well as for its services division.

In an interview with CNBC’s Steve Kovach, Apple CEO Tim Cook called iPhone demand “staggering.” Overall iPhone revenue climbed 23% on an annual basis, but Apple said sales could have been even better with more access to chips.

Earlier yesterday, an Apple representative confirmed its acquisition of Israeli AI startup Q.ai. It did not disclose a purchase price for Q.ai, whose website suggests is working on an audio-related product.

Another AI deal could be coming: A source told CNBC yesterday that Amazon is in discussion to invest as much as $50 billion in OpenAI over the coming weeks.

OpenAI CEO Sam Altman and Amazon CEO Andy Jassy have been in direct discussions, the source told CNBC. The talks are considered fluid and the final sum could change, they said.

Such a deal would be notable given the fact that Amazon has invested billions into Anthropic — one of OpenAI’s leading competitors — since 2023. A representative for Amazon declined CNBC’s request for comment.

Between the Fed meeting, a government funding standoff and a barrage of earnings, it’s been a packed week. Here’s some of the stories you might have missed:

CNBC’s Jeff Cox, Yun Li, Jordan Novet, Samantha Subin, Sean Conlon, Pia Singh, Garrett Downs, Kif Leswing, Steve Kovach, Ashley Capoot, Kate Rooney and Annie Palmer contributed to this report. Josephine Rozzelle edited this edition.