U.S. stock index futures pointed to a sharply lower open after news late Tuesday that White House chief economic advisor Gary Cohn has resigned.
Dow Jones industrial average futures indicated an open of 300 points lower, while the S&P 500 futures implied a decline of more than 1 percent. Industrials stocks Caterpillar and Boeing fell more than 2 percent in extended trading.
Cohn, former Goldman Sachs president and COO, was seen as supporting more business-friendly policies, especially in the wake of President Donald Trump’s surprise announcement of tariffs on steel and aluminum imports on Thursday.
SPDR S&P 500 ETF (SPY) after-hours performance
“I think this is definitely a bigger deal than some of the other departures, due to Cohn’s reputation as proponent of Wall Street, said Dan Deming, managing director at KKM Financial. “Short-term I believe it would increase concerns of an increased probability of a trade war escalating.”
However, he and other analysts noted that it was too early to determine whether there will be lasting damage to market psychology.
The U.S. dollar index extended losses, trading 0.7 percent lower near 89.42 as of 6:19 p.m., ET. Gold futures spiked, trading about 0.4 percent higher near $1,341.30.
U.S. stocks closed higher Tuesday, recovering from earlier concerns about a possible trade war.
The major averages declined earlier in Tuesday’s session after Bloomberg News reported, citing sources, that Trump was convinced Cohn would leave the administration if the tariffs proposed by the president were implemented.
“The statement was, if Trump went forward with these tariffs, Cohn would leave. It’s tempting to think that since Cohn is leaving, they’re definitely coming through. … I think that’s a bit premature,” said Nathan Sheets, chief economist at PGIM Fixed Income.
“At minimum, though, this is a powerful voice inside the White House that will not be there arguing against [tariffs],” Sheets said. “Therefore, the probably may be higher that they go through.”
On Thursday, Trump announced the U.S. would impose 25 percent tariffs on steel imports and 10 percent on aluminum imports, which could take effect as early as this week.
