Stock Futures Point to a Grim Start to Wednesday Trading after Trump Adviser Resigns

If the futures markets are any indication, Wednesday is shaping up to be a grim day on Wall Street. Stock futures were down across the board overnight  after President Trump’s top economic adviser resigned over a trade policy dispute.

Cohn Quits

White House economic adviser Gary Cohn announced his formal resignation Tuesday evening, fueling fears that the Trump administration would follow through on its plan to impose stiff tariffs on steel and aluminum imports. Cohn had warned against pursuing any policy that could ignite a trade war with U.S. allies.

The White House  said the dispute over tariffs wasn’t the only reason for Cohn’s resignation, but didn’t specify what other issues Cohn had with the administration’s policies.

Cohn, who previously served as the president and COO of Goldman Sachs, supported business-friendly policies that may have clashed with the president’s hardline approach to trade and other issues.

As Hacked reported earlier, President Trump could be pushing for tariffs as a negotiation tactic for securing a more favorable NAFTA deal. Trump has offered Canada and Mexico exclusion from the tariffs in exchange for an expedited NAFTA deal. Canada is the top exporter of steel and aluminum to the U.S.

Trump tweeted Tuesday night that the search for the next economic adviser was already underway.

Several Republican leaders have come out against the proposed tariffs, including House Speaker Paul Ryan and Senate leader Mitch McConnell. Congressman Mark Meadows, who heads the ultra-conservative Freedom Caucus, has also urged the president to rethink his decision.

Stock Futures Signal Rocky Day Ahead

Equity markets were down sharply in overnight trade, with Dow Jones futures pointing to a decline of 300 points or more at the open. At press time, Dow Jones mini futures for March settlement were down 341 points.

S&P 500 mini futures contracts fell 28 points. Nasdaq 100 minis also plunged 67.50 points.

The SPDR S&P 500 ETF Trust was down 1.5% at the time of writing.

U.S. stocks finished mostly higher in regular trade on Tuesday, with the S&P 500 and Nasdaq sitting in positive territory month-on-month.

Cohn’s resignation is likely to be very significant for the markets on Wednesday. Investors are generally opposed to tariffs since they have the potential to slow international trade flows and ignite enmity among nations.

The European Union (EU) has already warned it will retaliate if Washington moves forward with the proposed plan. Brussels has said it will impose retaliatory tariffs worth up to $3.5 billion targeting American-made motorcycles, whiskey and apparel.

In response, Trump criticized the EU for being “impossible” to worth with, adding that “they’ll like us better and they’ll respect us more” once tariffs have been implemented.

In addition to trade concerns, economic data will be top of mind for investors in the latter half of the week. On Wednesday, payrolls processor ADP Inc. will report on private-sector job creation for the month of February. Two days later, the Department of Labor will issue its official nonfarm payrolls report for the same month.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi

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