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U.S. markets opened sharply lower on Wednesday, reacting to news that President Donald Trump's top economic adviser, Gary Cohn, is stepping down.

The Dow Jones opened down 289 points, or just over 1 percent, with futures having fallen as much as 400 points overnight. The S&P 500 index fell by around 24 points and the Nasdaq slumped by just over three-quarters of a percent.

Cohn, the market-savvy former president of Goldman Sachs, was seen by many on Wall Street as a crucial influence in the White House and a key player in convincing Trump to modify his controversial tariff on steel and de-escalate worries over a trade war.

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Markets have gyrated furiously over the past few months in response to the prospect of inflationary measures, the impact of a 25 percent steel tariff, and Trump's comments that trade wars are "good" and "easy to win."

Wednesday's reaction on Wall Street “shows that the market had a lot of trust in Cohn’s judgment," said Ameritrade's J.J. Kinahan. “He was viewed as the calmer head that would prevail in the [Trump administration]."

Without "Globalist Gary" Cohn as a buffer, investors fear the White House will be free to ramp up the anti-trade agenda and adopt protectionist policies that could lead to an all-out trade war that could threaten global expansion for U.S. companies.

“Investors are taking risk off the table to see how much more damage in the administration this will cause,” Andre Bakhos, managing director at New Vines Capital, told Reuters.

The White House played down Cohn's exit, however, with Commerce Secretary Wilbur Ross saying in an interview with CNBC Wednesday morning that the move "isn't some kind of a palace coup."

Ross praised Cohn's contributions to the nation's economic progress and denied that the departure of Trump's top economic adviser was radical, saying that Cohn had been "kind of contemplating some sort of a move for a while."

As for Cohn's replacement, "This is going to be a sensible rollout," carried out "with relative peace and quiet" said Ross.

Cohn served as director of Trump's National Economic Council for 14 months and had been considered a shoe-in for the coveted position of chairman of the Federal Reserve, until he rankled Trump by publicly rejecting the president's comments about "both sides" being responsible for white nationalist rioting last summer in Charlottesville, Virginia.