August 23, 2017 / 12:47 PM / a year ago

US STOCKS-Wall St rally set to end after Trump's comments

* Trump ready to shut govt to build Mexico border wall

* Trump says might scrap NAFTA to jumpstart talks

* Lowe’s drops on margin forecast cut, Home Depot also down

* American Eagle jumps on earnings report

* Futures lower: Dow 63 pts, S&P 8.5 pts, Nasdaq 20 pts (Adds details, comments, updates price)

By Sruthi Shankar

Aug 23 (Reuters) - U.S. stocks were set to open lower on Wednesday as investors pulled back after President Donald Trump warned of a government shutdown to build a Mexico border wall and threatened to terminate a trade agreement with Mexico and Canada.

“If we have to close down our government, we’re building that wall,” Trump said at a rally in Phoenix, Arizona, in reference to his pledge to tighten immigration controls at the U.S.-Mexican border.

Trump also said he might scrap the North American Free Trade Agreement with Mexico and Canada to jumpstart negotiations. The three countries ended their first round of talks on Sunday, as they aim to revamp the NAFTA by early 2018.

Investors have grown increasingly concerned about Trump’s ability to legislate his pro-growth agenda, especially those of tax cuts and infrastructure spending, given the near constant political rumblings in the White House.

“The pullback is from pretty strong words out of the president ... comments on NAFTA, which brings up a question of a global trade war, is weighing,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

“You can have a tax cut, but if you have a trade war, that is going to impact the economic growth,” Cardillo said.

Trump’s comments looked set to deflate a strong recovery in U.S. stocks on Tuesday, when they enjoyed their best one-day percentage gains in over a week as lawmakers’ comments on tax reform and the debt ceiling boosted investor optimism.

At 8:27 a.m. ET (1227 GMT), Dow e-minis were down 63 points, or 0.29 percent, with 27,177 contracts changing hands.

S&P 500 e-minis were down 8.5 points, or 0.35 percent, with 187,695 contracts traded.

Nasdaq 100 e-minis were down 20 points, or 0.34 percent, on volume of 30,589 contracts.

Investors are also jittery ahead of the annual gathering of global central bankers in Jackson Hole, Wyoming, where Federal Reserve Chair Janet Yellen’s Friday speech will be scrutinized for clues on the central bank’s stand on monetary policy.

Among stocks, Lowe’s dropped about 5 percent to $72.10 in premarket trading after reporting a lower-than-expected profit and slashing its margins forecast. Home Depot was off 0.87 percent.

Salesforce was off about 2 percent as its strong growth in quarterly revenue failed to satisfy some investors, who were looking for a stronger billings forecast.

American Eagle surged 11 percent to $12.45 after the teen apparel maker reported a surprise rise in comparable sales. Abercrombie and Fitch rose 3.83 percent. (Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza)

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