Market today: Cook’s removal rattles investor sentiment

Wall Street recovered on Tuesday after a sharp overnight drop sparked by former President Donald Trump’s announcement of Federal Reserve Governor Lisa Cook’s dismissal. Posted on social media late Monday, the move reignited concerns over the Fed’s independence from the executive branch and sent a jolt through global markets.

At the open, U.S. stocks hovered near breakeven, just below recent record highs. The S&P 500 (SPY) showed little movement, the Dow Jones (DIA) slipped 30 points, or 0.1%, and the Nasdaq (QQQ) traded flat. Treasury yields were steady, while oil prices extended their decline.

Index futures had dipped 0.1% ahead of the bell as investors assessed the political fallout. Governor Cook declared she would not resign, setting the stage for a legal confrontation expected to reach the Supreme Court.

Institutional crisis at the Fed

Analysts and financial strategists expressed concern over Trump’s decision, interpreting it as an effort to exert direct influence over monetary policy.

“The dismissal of a sitting governor shakes confidence in the institution that underpins the global financial system.”
— Nigel Green, CEO, deVere Group

European markets slipped following the announcement. The German DAX declined 0.3%, France’s CAC 40 lost 1.4%, and the UK’s FTSE 100 shed 0.5%. Trump has previously criticized Fed Chair Jerome Powell for resisting deeper rate cuts, even threatening to dismiss him.

Despite political turbulence, markets continue to expect policy easing. CME Group data shows traders assigning an 84% chance of a 25-basis-point rate cut in September.

In Asia, major indexes also ended lower. Tokyo’s Nikkei 225 dropped nearly 1% to 42,394.40, Australia’s S&P/ASX 200 fell 0.4% to 8,935.60, and South Korea’s Kospi slid 1% amid improving consumer confidence, which may reduce the case for rate cuts. Hong Kong’s Hang Seng declined 1.2% to 25,524.92, while China’s Shanghai Composite slipped 0.4% to 3,868.38. Regional sentiment remains fragile amid rising political and economic tensions.

Corporate front

Boeing (BA) rose nearly 1% after Korean Air announced a $50 billion order for over 100 aircraft, including spare parts and a 20-year maintenance agreement. Shares had been flat prior to the deal.

U.S. crude fell $1.09 to $63.71 a barrel, while Brent crude slid $1.02 to $67.20. Oil has dropped 8% in August and nearly 14% since early summer, pressured by higher OPEC supply and the seasonal decline in demand.