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Published: Sat, August 19, 2017
Economy | By Melissa Porter

U.S. stocks recede as Trump's policy agenda at risk of crumbling

U.S. stocks recede as Trump's policy agenda at risk of crumbling

Without Cohn, tax reform and other economic moves would be harder to accomplish, Wall Street pros said.

The S&P 500 posted its second steepest one-day decline this year, down 1.5pc to 2,430.01, while the Dow closed down 274 points to 21,750.73.

A CEO exodus this week in response to President Trump's somewhat equivocal response to deadly racist riots, combined with rising resistance to Mr Trump among Republicans on Capitol Hill, has tempered earlier market optimism about the President delivering on his economic policies. "And you had a big rally based on that", said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

News that a terrorist attack in Barcelona in Spain had left at least 16 people dead added to concerns.

The dollar retreated against the euro, although it recovered from session lows after the White House's denial about Cohn. The index dropped 1.4 per cent last Thursday, as concern over a possible conflict between the United States and North Korea hit the market.

The euro had tumbled to a three-week low of US$1.1662 on Thursday, after the minutes of the European Central Bank's July 20 policy meeting showed policymakers were anxious that the repricing of the currency could overshoot.

Tokyo was also more than one percent down by the break, as the Nikkei also struggled in the face of the renewed strength of the yen against the greenback.

Reports of Cohn exiting Team Trump came after sources told POLITICO that he was upset about his boss's soft stance on white nationalist protesters behind violence in Charlottesville, Va. "We're still fighting. There's Treasury and Gary Cohn and Goldman Sachs lobbying".

But while many White House employees have been disappointed by the president's remarks, Trump himself reportedly hasn't regretted his statements. Cohn, whose name has been floated in the media as a potential successor to Janet Yellen at the helm of the Federal Reserve, has not spoken publicly on the president's comments. If he quit now, his Fed chair ambitions would be dashed.

Congressional aides and some White House officials acknowledged that Cohn's job has become much more hard, because Trump's comments further entrenched Democrats and alienated some Republicans who are nervous about what Trump might say next.

After those comments, many corporate chief executives on two White House advisory councils began resigning from the groups, including 3M's Inge Thulin and Campbell Soup's Denise Morrison.

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