U.S. stocks looked set to drop on Tuesday after President Donald Trump said he had removed Lisa Cook from her job as a Federal Reserve governor, reigniting concerns about the central bank’s independence under the current administration.
Futures tracking the Dow Jones Industrial Average were down 60 points, or 0.1%. S&P 500 futures slid 0.1%, and contracts tied to the tech-heavy Nasdaq fell 0.2%.
The three blue-chip indexes finished in the red on Monday, as the rally sparked by Fed Chair Jerome Powell’s Jackson Hole speech faded.
They were dropping again after Trump said in a Truth Social post that he would remove Cook, citing allegations that she submitted fraudulent information on mortgage applications, although it is unclear if the president possesses the power to fire her.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said in a statement late Monday. “I will not resign.”
The U.S. dollar plummeted after Trump said he would fire Cook, then pared back its losses after she said she would not resign. It was up 0.1% against a weighted basket of its peers early Tuesday.
If Trump does manage to dismiss Cook, it would free up another vacancy on the Fed’s board, just weeks after Governor Adriana Kugler stood down. Trump has nominated his economic advisor Stephen Miran to replace Kugler.
If the president picks another ally to fill Cook’s spot, that could make interest-rate cuts more likely, although it would also raise questions about the Fed’s independence under Trump.
“This could turn into the most market-relevant test so far of Trump’s ability to fire officials of independent government agencies,” Deutsche Bank economist Peter Sidorov said.
Aside from Cook’s removal, it could be a quiet day for the market. Investors are focused on Nvidia’s quarterly earnings, with the chip maker set to report after Wednesday’s closing bell, although consumer confidence data due Tuesday could give a sense of how businesses are feeling about sweeping U.S. tariffs.