Tesla's Stock Tumbles in the Face of Trump-Musk Feud: A Rocky Wall Street
Wall Street is experiencing a drop, as Donald Trump and Elon Musk stir up economic uncertainty.
After a promising start, Wall Street faced a tumultuous ending, with major indices plunging. The cause? A public spat between US President Donald Trump and Tesla CEO Elon Musk that left Tesla's stock reeling. On June 6, 2025, a 14% drop, equating to around $150 billion in market value, sent Tesla’s stock spiraling.
The war of words between the President and the billionaire tech mogul took center stage, dimming the trading atmosphere. Adding fuel to the fire, uncertainty over the progress of the US-China trade talks weighs heavily on market participants.
The Dow Jones Industrial Average, a collection of blue-chip stocks, failed to hold its early gains, finishing the day with a 0.2% loss, at 42,320 points. Meanwhile, the tech-heavy Nasdaq saw a 0.8% drop, closing at 19,298, and the broad-based S&P 500 experienced a 0.5% decline, settling at 5,939. Earlier in the day, all three major indices had briefly risen by up to 0.8%.
The dispute between Trump and Musk began when the President endorsed a tax and spending bill. Musk, in recent days, has intensified his criticism of the bill, while accusing Trump of lobbying for a provision that would eliminate tax credits for electric vehicles. "The impact on Tesla's stock is undeniable," said Mark Spiegel, portfolio manager at Stanphyl Capital. However, he believes that the gesture would only affect the market marginally, aside from some indirect consequences on indices and index funds. "The overall stock market has too many troubles on its plate. Tesla ain't one of them," Spiegel added.
As the feud escalated, there were whispers of potential regulatory changes and their consequence on Tesla's government contracts. These concerns left investors jittery and contributed to the overall negative sentiment. Yet, there were signs of recovery as Tesla's stock rebounded, rising by 4.5% in pre-market trading on June 7, 2025.
Beyond Tesla's turbulent day, the mining companies Freeport-McMoRan and Southern Copper experienced a positive uptick, while Brown-Forman, the maker of "Jack Daniel's" whiskey, and PVH, the owner of "Tommy Hilfiger" and "Calvin Klein," faced significant declines due to financial forecast predictions and disappointing quarterly results, respectively.
Meanwhile, the US job market and the future of Fed's interest rate adjustments are under scrutiny. With the release of the US jobs report scheduled for June 10, 2025, experts anticipate a decrease in new job creation outside the agriculture sector for the month of May. Data from private provider ADP on June 3, 2025, suggested a decline, while initial claims for US unemployment benefits rose for the second week in a row. "I don't think this is a serious warning sign yet, but it does signify a gradual cooling of the labor market," said Kevin Gordon, strategist at financial services firm Charles Schwab. Investors hope that the weak job data might prompt the US Federal Reserve to reduce interest rates, as bankers attempt to curb high inflation and temper the overheated labor market.
Against this backdrop of economic uncertainty, Trump and Chinese President Xi Jinping held a phone conversation, spurring hopes of a cooling down in the recently reignited trade dispute. Despite the optimistic words from both leaders, investors are wary of unexpected twists, emphasizing the importance of building portfolios that can withstand such unforeseen circumstances. As Jed Ellerbroek, portfolio manager at Argent Capital Management, put it, "It's less about predicting what Trump will do and more about constructing a portfolio that can thrive even in turbulent waters."
- The controversy between Trump and Musk, affecting Tesla's stock, has sparked discussions about potential impacts on various policies, including community and employment policies, as well as vocational training, due to possible changes in government contracts.
- In the midst of the tumultuous Wall Street, where finance, business, and politics intersect, general-news outlets are closely monitoring the US-China trade talks progress, US job market trends, and the Fed's interest rate adjustments, as they all contribute to market volatility.
