Futures Slip as Trump Attacks Fed Independence

U.S. stock futures were lower Tuesday, adding to a slide in the major averages to start the week, after President Donald Trump removed Federal Reserve Governor Lisa Cook from the board of the central bank. Futures for the Dow Jones Industrials retreated 62 points, or 0.1%, to 45,288. Futures for the broader index fell 3.25 points to 6,452.25 Futures for the NASDAQ lost five points to 23,493.25 In Japan, the Nikkei 225 dipped 1% Tuesday, while in Hong Kong, the Hang Seng fell 1.2%. Trump’s unprecedented move adds to the pressure the president has been putting on the central bank’s independence. By law, a president may only remove Fed governor “for cause.” As a result, it is possible the matter will be challenged in the courts. There are currently six members on the Fed’s board, with one seat vacant after the resignation of Adriana Kugler earlier this month. Removing Cook would leave five members, with non-Trump appointees still holding a majority. However, if Stephen Miran is cleared for the Kugler vacancy and the president is successful in removing Cook, it would give Trump a 4-3 majority. If Fed Chair Jerome Powell leaves his seat voluntarily after his term expires in May, it would give the president a fifth vote. Investors already appeared hopeful about the prospect of lower interest rates coming in September, as hinted at by Powell last week in Jackson Hole, Wyoming. They’re also looking ahead to Nvidia’s earnings report on Wednesday, which could bolster the megacap tech trade following its recent slide. The “Magnificent Seven” stocks rallied Friday, but only after five straight days of losses. A raft of economic reports is due out Tuesday morning. Investors will parse through releases on the latest durable goods orders and consumer confidence. The Case-Shiller Home Price Index is due out, as is the Richmond Fed Manufacturing Index. Oil prices surrendered $1.21 to $63.59 U.S. a barrel. Gold prices nicked up 80 cents at $3,418.30 U.S. per ounce.