Speculation Builds Over Who Trump Will Pick to Replace Powell as Fed Chair

So here's the year-end wrap-up: 2025 was, as the AP put it, a "scary good" year for the stock market. Scary, because there were some genuinely wild moments. Good, because if you just held on and didn't panic-sell, you probably came out ahead — S&P 500 index funds, which are the backbone of most people's 401(k)s, returned more than 18% in 2025 through mid-December and hit a record high along the way, marking a third straight year of solid gains.

But let's talk about how bumpy the ride actually was, because it explains a lot about why your retirement account might have felt like a roller coaster this year. The biggest gut-punch came in April, on what Trump called "Liberation Day," when he rolled out a much bigger and broader set of tariffs than anyone on Wall Street expected. Markets freaked out almost immediately over fears of a recession and rising prices. The S&P 500 dropped nearly 5% in a single day — its worst day since the COVID crash back in 2020 — and then fell another 6% the next day after China hit back with its own tariffs, stoking fears of a full-blown trade war. The damage didn't stop at stocks, either: the U.S. dollar weakened and even the usually-boring Treasury bond market got shaky, which is the kind of thing that makes economists nervous because it's supposed to be the safest, most predictable corner of the financial world.

Layered on top of the tariff drama was Trump's ongoing feud with the Federal Reserve. Throughout the year, Trump kept pushing Fed Chair Jerome Powell to cut interest rates faster, and speculation kept building over who Trump might tap to eventually replace him. Names like Kevin Hassett (his National Economic Council director) and Kevin Warsh (a former Fed official who's been openly critical of how the Fed's been run) were floated as contenders. That uncertainty over the Fed's leadership and direction added another layer of anxiety for investors, since interest rate decisions ripple through everything from mortgage rates to how much your savings account earns.

And then there was the extra chaos outside the stock market: bitcoin had a wild swing up and then back down, and the bond market got tense enough that it reportedly caught Trump's own attention.

Why should you care about any of this if you're not glued to CNBC? Because most people's retirement savings — 401(k)s, IRAs, pension funds — are tied directly to how the stock market does. A year like this shows how sensitive your nest egg is to political decisions (tariffs, Fed picks) that have nothing to do with your own financial choices. The good news from 2025's story is that patience paid off: people who didn't panic during the April crash and stayed invested ended up doing just fine by year's end.