Stock futures fall as Cohn’s exit heightens trade war worries

Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., March 2, 2018. REUTERS/Andrew Kelly

March 7, 2018

By Sruthi Shankar

(Reuters) – U.S. stock index futures fell sharply on Wednesday after the resignation of top economic adviser Gary Cohn, a supporter of free trade in the White House, triggered worries that President Donald Trump may push ahead with plans to impose hefty metal tariffs and ignite a global trade war.

Dow e-minis <1YMc1> were down 257 points by 7:20 a.m. ET.

Manufacturing giants Boeing <BA.N> and Caterpillar <CAT.N> slipped 2 percent in premarket trading, while General Electric <GE.N> dipped 1.4 percent after Deutsche Bank analysts warned that rising metal input costs could weigh on a deal for its rail business.

S&P 500 e-minis <ESc1> were down 20.75 points and Nasdaq 100 e-minis <NQc1> fell 40.75 points.

The declines continued from Tuesday night after Cohn, the architect of the tax overhaul enacted in December, said he would resign, a move that came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs.

Cohn, a former president and chief operating officer of investment bank Goldman Sachs, was seen by investors as a stabilizing force within the Trump administration.

Demand for safe-haven assets including U.S. government debt and Japanese yen rose, while Wall Street’s fear gauge, the CBOE Volatility index <.VIX>, was up 11 percent at 20.42.

The ADP’s National Employment Report, due at 8:15 a.m. ET, is expected to show private employers added 195,000 jobs in February, compared with 234,000 jobs in January.

A more comprehensive report that includes hiring in both public and private sectors is due on Friday.

The Federal Reserve will publish its Beige Book, a compendium of anecdotes on the health of the economy, in the afternoon. The Fed’s next policy meeting is scheduled for March 20-21.

Fed’s New York President William Dudley and Atlanta Fed chief Raphael Bostic are expected to speak on Wednesday.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

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