U.S. stocks traded lower on Tuesday as Wall Street feared President Donald Trump's chief economic adviser, Gary Cohn, could leave the administration.
The Dow Jones industrial average fell 150 points after opening more than 100 points higher. The S&P 500 slipped 0.3 percent, with utilities as the worst-performing sector. The Nasdaq composite traded 0.1 percent lower.
"If you have a high-profile person like Gary Cohn leaving, that starts to send things into a tailspin in government and the market is concerned about that," said Robert Pavlik, chief investment strategist at SlateStone Wealth. "The Cohn news is causing investors to take a wait-and-see approach."
Stocks started to pare gains after Bloomberg News reported citing sources that Trump was convinced Cohn would leave the administration if the tariffs proposed by the president were implemented. Cohn, a former Goldman Sachs executive, was a champion of the tax cuts implemented by the Trump administration last year.
"If [Cohn] leaves it's a big deal because that means the 'America First' people are taking over," said Larry McDonald, head of the U.S. macro strategies at ACG Analytics and editor of The Bear Traps Report.
CNBC's Jim Cramer tweeted about the pullback in stocks, calling it the "Cohn sell off."
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Trump announced last week the U.S. would be imposing new tariffs on aluminum and steel, before going onto threaten European carmakers with a tax on imports if the European Union retaliated over the U.S. administration's tariff plans.
House Speaker Paul Ryan said Monday he was "extremely worried" about President Donald Trump's trade plan. But Ryan backtracked on Tuesday, calling for targeted tariffs on metals rather than blanket tariffs. Treasury Secretary Steven Mnuchin also backed implementing tariffs.
The major averages rose earlier after North Korea said there was no need to keep its nuclear program as long as there was no military threat against it and the safety of its regime was secured, Chung Eui-yong, head of the South Korean presidential National Security Office, told a media briefing.
Stock futures jumped on the news, while the dollar traded lower to give commodities like oil and gold a boost.
In corporate news, Nordstrom shares slipped 0.8 percent after the company rejected an offer from the Nordstrom family to take the company private for $50 per share. The Nordstrom family has been working to take the company private since last year.
—Reuters contributed to this report.
