Wall Street Crashes, Tesla's Stock Plummets in Trump-Musk Fiasco
Wall Street is being negatively impacted by the actions of Trump and Musk.
A fierce exchange between Elon Musk, the maverick CEO of Tesla, and U.S. President Donald Trump has sent Tesla's stock spiraling. The company faced a whopping $150 billion loss in market value, with shares tumbling 14%. The vicious spat between the tech billionaire and the president left Wall Street in shambles as well.
The ongoing feud between Trump and Musk initiated a stock market rout in the evening. The rift started over a tax and spending bill pushed by the president. Musk intensified his criticism of the bill, while Trump perceived it as Musk's opposition to the elimination of tax credits for electric vehicles. Musk, in response, accused Trump of trying to punish the tech giant.
"The impact on Tesla's stock is evident," said Mark Spiegel, head of Stanphyl Capital. However, he doesn't foresee any significant implications for the rest of the market, other than minor effects on indices and index funds. "The overall stock market has enough troubles, but Tesla isn't one of them."
Meanwhile, investors are eagerly awaiting a de-escalation in the recently reignited trade dispute between the U.S. and China. After a lengthy conversation, Trump and Chinese President Xi Jinping reported a positive outcome for both countries. Delegations from both countries are expected to meet soon, and leaders have exchanged invitations. "I have no idea what the outcome will be," said Jed Ellerbroek, portfolio manager at Argent Capital Management. "I think it's less about predicting what Trump will do and more about constructing a portfolio that can succeed even in unexpected twists."
U.S. Employment Data Under the Microscope
As the labor market slightly cools off, investors are vigilant about the U.S. employment report, set to be released on Friday. The report is expected to show fewer new jobs outside the agriculture sector for May. Previous data from ADP and an increase in initial claims for U.S. unemployment benefits point to a slowdown in hiring activity. "I don't think this is a serious warning sign yet, but it shows that the labor market is gradually cooling off," said Kevin Gordon, strategist at Charles Schwab.
Central bankers, trying to tackle high inflation, have been raising interest rates and aiming to rein in the overheated job market. Market participants expect more rate cuts this year in response to weak job data.
Steep Drops in "Jack Daniel's" and "PVH" Stocks
Individual stocks like spirits maker Brown-Forman, which produces "Jack Daniel's" whiskey, and fashion company PVH, owner of brands "Tommy Hilfiger" and "Calvin Klein," suffered heavy losses. Brown-Forman shares plummeted more than 17%, and PVH shares fell around 18%. Procter & Gamble shares slipped by about 2%, while mining companies Freeport-McMoRan and Southern Copper saw gains of more than 2% each.
For further insights into today's market activity, head here.
Source: ntv.de
- Wall Street
- Tesla Motors
- Labor Market
- Employment Report
- Tariffs
The Trigger Behind Tesla's Troubles
The recent turmoil in Tesla's stock price can be traced back to the public feud between Elon Musk and Donald Trump. Here's a breakdown of the events leading up to the drop in Tesla's share value:
Historical ContextBefore their relationship turned sour, Musk and Trump had once been allies. Musk's support for Trump and the subsequent post-election surge in Tesla's stock price indicated investor enthusiasm about potentially favorable policy outcomes. However, their camaraderie eventually soured.
Cause of the ConflictThe initial spark for the conflict occurred when Musk publicly criticized Trump's new tax-and-spending bill on social media. Trump reacted angrily, warning that he would cut off government contracts for both Tesla and SpaceX. Musk retaliated by suggesting he would halt SpaceX's Dragon spacecraft missions for NASA.
Impact on Tesla's StockThe acrimonious exchange led to a sharp decline in Tesla's stock price. On the day of the public spat, Tesla's shares slid by 18% during intraday trading, closing down 14.3%. This was the largest dip in almost five years. Tesla's stock has plummeted about 30% year-to-date, partly due to this incident and broader concerns about the company's performance and market expectations.
Broader Market and Company ContextTesla's stock volatility is often determined by perceptions of government support and Musk's public actions. Despite the recent drop, Tesla is gearing up for a significant move, preparing to launch its robotaxi service, a crucial step in their strategy for autonomous vehicles.
Analyst PerspectivesAnalysts like Dan Ives from Wedbush remain optimistic about Tesla's future, viewing the stock as "way oversold" and predicting a rebound due to the company's potential in autonomous technology. Nevertheless, near-term investors' confidence may hinge on the resolution of the feud between Musk and Trump and Tesla's ability to successfully navigate its upcoming strategic initiatives.
- Community policy and employment policy could be influential factors in resolving the feud between Elon Musk and U.S. President Donald Trump, as their exchange has affected Tesla's stock value and economic stability.
- Vocational training programs might be essential to cushion the impacts of potential layoffs in the business sector, considering the recent slowdown in hiring activity noticed in the U.S. employment report, and the ongoing turbulence in the stock market due to political, taxation, and trading-related issues.
