Stocks wobble as Trump adviser resigns
NEW YORK — “What does it mean for trade?” That question continued to guide Wall Street on Wednesday, leading stocks to a mixed finish after President Donald Trump's top economic adviser resigned after opposing the administration's planned tariffs on imports of steel and aluminum.
Stocks fell in the morning as investors reacted to the pending departure of Gary Cohn, a former Goldman Sachs executive who was seen as a proponent of free trade. The losses deepened after Trump suggested on Twitter that the U.S. may impose penalties on China as part of intellectual property disputes. The Dow Jones industrial average plunged.
Cohn, the director of the National Economic Council, was known to disagree with the tariff plan, which has also drawn criticism from Republicans in Congress as well as from much of corporate America.
“He was seen as a key proponent of free trade to balance some of the other more protectionist-type advisers in the administration,” said Keith Parker, U.S. Equity Strategist for UBS. Cohn was also considered one of the architects of last year's corporate tax cut.
The market bounced back late in the afternoon after the White House said some countries, including Canada and Mexico, might be granted exemptions to the tariffs. That suggested a lighter touch that won't affect the global economy and corporate profits as much as a broader tariff would, and wouldn't result in as much retaliation.
Industrial giants like Caterpillar and Boeing were whipsawed. Tech and health care companies closed higher. Energy companies fell with oil.
In response to the planned steel and aluminum tariffs, the European Union has proposed tariffs on U.S. exports including motorcycles and bourbon. Jack Daniel's maker Brown-Forman sank after CEO Paul Varga said his company “could be an unfortunate and unintended victim” of more hostile trade. Varga said the company has been selling more lower-priced liquors in Europe, leaving it more vulnerable to higher costs.
The company also forecast a smaller-than-expected annual profit, and its stock dropped $3.15, or 5.6 percent, to $52.89.
Motorcycle maker Harley-Davidson slid 43 cents, or 1 percent, to $43.90.
On Twitter, Trump said the government is also “acting swiftly on intellectual property theft.” The U.S. Trade Representative is investigating whether Chinese intellectual property rules are “unreasonable or discriminatory” to American business.
Parker said the tariffs could cut corporate profits by about $10 billion, far less than the boost corporations will get from the tax cut that was signed into law in December. But he said steps against China, and retaliation by its government, could raise the cost of items including phones and clothing.